Current gaps in income and earnings statistics:

The self-employed

Conor D’Arcy

July 2015

@conortdarcy / @resfoundation

Two notable trends during the downturn and recovery – (i) weak earnings growth

Two notable trends during the downturn and recovery – (ii) strong employment growth

• For HMT – to what extent will growth feed through to the pockets of workers? How tax-rich is the recovery?

• For the Bank of England – what is the level of inflationary pressure in the labour market?

• Politically – has the corner been turned? And for whom?

A problem of central importance to our understanding of the recovery

From the crisis up to 2011-12 the self-employed experienced an earnings decline of up to 24%, compared to up to 9% for employees

The data we do have on self-employed earnings suggests they have fallen even further

From this we estimate what the earnings of ‘all workers’ would look like on our most timely earnings measure

And our speculative projections for the most recent years suggest this gap has not been closed

An improved measure of earnings that captures all workers, not just employees, to function alongside existing measures

What do we want?

When do we want it?

Well, depends...

Options for consideration

Description Source

1 Adjust existing data on wages and salaries among employees using existing household surveys

Labour Force Survey (with new self-employed earnings questions) or Family Resources Survey (as in our provocation)

2 Expand coverage of the Labour Force Survey to capture the earnings of all workers

Labour Force Survey (with new self-employed earnings questions)

3 Adjust existing data on wages and salaries among employees using HMRC data

HMRC administrative data

4 Expand the scope of the Bank of England’s survey

BoE NMG consulting survey

5 Adjust existing data on wages and salaries among employees using a new survey of self-employed earnings

New survey

• A necessarily complex endeavour: both in defining and measuring

• The bigger picture: we need the best and most timely suite of tools possible for understanding earnings, incomes and living standards

• In the meantime: we will continue to publish our ‘best guess’

Summary

Current gaps in income and earnings statistics:

The self-employed

Conor D’Arcy, Resolution Foundation2 July 2015