Class Gaps Widen In Britain

The same trends that have weakened America's middle class since the late 1970s are apparent in Britain, contends economist Frederick R. Strobel of the University of South Florida in the current issue of Challenge magazine.

From 1979 to 1992, notes Strobel, the top 20% of British households increased their share of total household income by eight percentage points, to 43%, while the shares of the bottom 20% and the middle 60% fell by four percentage points each. The biggest gains were posted by the top 5%, whose income share from 1979 to 1989 rose by more than 25%, to 15.3% of total income.

Developments adversely affecting Britain's middle class, says Strobel, include a 38% drop in factory employment since 1980 and a sharp decline in unionization--from over 50% of the workforce to about 37%. A merger-and- acquisition boom has also eroded jobs.

One big difference from U.S. income patterns is that British wages have managed to outpace inflation over the past 20 years--a development that Strobel attributes to its low level of immigration and higher (though reduced) level of unionization. Like Germany and France, however, Britain has had to pay a price for its real wages gains: an unemployment rate significantly higher than America's.

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