Having recently written a long piece about the origin of what was termed neoliberal economics and how it inevitably led to a disgraceful, vacuous, malignant narcissist like Trump being elected to the US presidency1, I decided to have a crack at looking at the effects it has had on the UK and the US populace. This is Part 1 and deals with income inequality, wage stagnation, job insecurity and declining union influence.
Neoliberal economic policies include market deregulation, privatisation, reduced welfare provisions, lower taxes on the wealthy, and weakened union influence have broadly shaped the economies of both the US and the UK since the 1980s with the election of Reagan and Thatcher respectively. This has been the standard economic model adopted by major political parties since then. Over the last 25 years, these policies have continued to influence the fortunes of middle- and working-class households in both countries leading to income inequality, decreasing job security, low wage growth, decreased union influence, decreased housing affordability, less access to medical care, and less access to education.
Income inequality
The GINI Coefficient is a measure of income inequality, with a value of 0 (zero) indicating perfect equality and a value of 1 (one) indicating maximum inequality. In the US, the GINI coefficient increased from 0.35 in 1980 to 0.42 in 2022 while2,
in the UK it increased from 0.29 in 1980, reached a peak of 0.39 in 2000 and declined to 0.33 in 2013, and has stayed fairly stable since then, reaching 0.32 by 20213.
In the US an increasing share of income accrues to top earners. In the US, the median income of middle-class households increased 60% (i.e. $66.400 to $106,100 in 2023 dollars) between 1970 and 2022. Over the same period, the median income of upper-income households increased 78% ($144,100 to $256,900), while that of lower-income households increased 55% (i.e. $22,800 to $35,300). As a consequence, there is a larger gap between the income of upper-income households and all others. Again between 1970 and 2022, the proportion of US household income held by the middle class has fallen each decade. In 1970 it was 62%; in 2022, it was 43%, and that is for a cohort which makes up 51% of the population. Over the same period, the share of US household income shared by upper-income households increased from 29% to 48% (in part this was caused by an increase in the proportion of the population in the upper-income class)4.
The UK became a much more equal nation during the post-war years, with the share of income going to the top 10% of the population fell from 35% to 21% in 1979, while the share going to the bottom 10% rose slightly. Since the election of Thatcher, this trend reversed sharply with inequality rising considerably over the 1980s, with the share going to the top 10% of the population reaching a peak of 31% in 2010 from where it has remained fairly stable5.
One of the most startling graphs is that for relative poverty rate. While the proportion of the population in the UK living below the poverty line was about 15% up to the early 1980s, it rose dramatically during and after the Thatcher years up to a maximum of about 25% in the early 1990s. It has only decreased slightly since, being at about 22% in 20206.
Both countries exemplify unequal income distribution, although the U.S. level of inequality is higher with the U.S. Gini coefficient (0.42) exceeding that of the U.K. (0.32). However, the impact on working and middle classes has been similar: a smaller share of economic gains, stagnant real incomes for many, and greater relative poverty risk. Income inequality translates to wider social inequalities, affecting health, life expectancy, and political influence in both countries.
Wage growth
Under neoliberal economic policies, wage growth for the typical American worker has been sluggish over the last 50 years. Up until the mid 1970s wages pretty much kept pace with productivity increases, such that between 1948 and 1973, productivity rose 97% while wages rose 91%. However since 1973 the two measures have diverged significantly. Between 1973 and 2013, productivity has increased by 74%, while wages have increased about 9%7.
Another metric which demonstrates the inequality in the US is the pace of pay increases for the top 1% of the population, which grew 138% between 1979 to 2013, while the wage increases for the bottom 90% of the population rose only 15% over the same period7. Such disparity is perhaps also indicated by the growth in the multiple typical worker’s wage to what their CEO earns. Back in the middle 1960s, this was about 20x; in the late 1970s it had reached 30x and it the late 1980s it started to skyrocket and in 2013 reached 296x7.
To illustrate how those at the bottom end of the pay scales has suffered. In 1990, the federal minimum wage was US$7.24; in 2014 it was $US7.257. In 2025 it is still $7.258. It has effectively not changed in 35 years.
The U.K. has experienced an even more drastic slowdown in real wage growth, especially after 2008. Up to the mid-2000s, British median earnings did grow modestly (the 1990s and early 2000s saw low unemployment and some wage rises). However, the 2008 financial crisis marked a turning point: the period from 2008 to the late 2010s has been described as a “lost decade” for wage growth in the U.K. Adjusted for inflation, the average U.K. worker’s pay in the early 2020s was roughly the same as in 2005. It has been calculated that after 15 years of almost no growth, the average worker in 2023 earned about £11,000 less per year than they would have if the pre-2008 trend had continued. This stagnation is historically unprecedented: in previous decades (1970–2007), real wages grew ~33% per decade on average, but essentially 0% growth occurred from 2007–2022. Since late 2022 wages have stagnated. In short, U.K. workers faced 15+ years of stagnant wages, undermining the premise that free-market policies would boost incomes for all9.
Job Security
Neoliberal labour market policies tend to prioritize flexibility for employers, often at the expense of job security for employees. In the U.S., job security for the working class has eroded since 2000. While the U.S. has long had employment that makes it easy to hire and fire, recent decades have seen growth in contingent and ‘gig’ employment lacking normal benefits. One analysis of payroll data found the share of workers engaged in gig arrangements (independent contractors or short-term gigs) rose by 15% from 2010 to 2019. The rise of digital gig platforms (Uber, Lyft, food delivery, etc.) in the 2010s created millions of fake self-employed jobs with no job security whatsoever. Even in regular employment, there has been increased use of outsourcing, temp agencies and contract work. Many employers shifted to using more part-time or seasonal workers to cut costs. The result is that fewer U.S. workers today enjoy long-term employment with stable benefits and predictable career progression. In addition, manufacturing job losses in the 2000s (over 5 million U.S. factory jobs lost 2000–2010 due to offshoring and automation) disproportionately hurt working-class job security. This was while highly skilled professionals gained well paid secure jobs, while many others faced insecure employment, fewer benefits, and the constant risk of falling into precarious work10-13.
The U.K. labour market has similarly become more flexible but insecure for many workers since 2000. One unpleasant development has been the spread of zero-hours contracts, which offer no guaranteed hours and on-call scheduling. These were rare in the 1990s but proliferated in the 2010s such that early in the 2020s reached around a million employees. Such contracts put workers in a precarious position with variable income and little job security. In addition, the U.K. saw rising self-employment and labour hire agency work, some of which are part of the ‘gig’ economy. This rose from about 12% of workers in 2001 to about 15% by 2017, and many of them do not have such benefits as sick leave, recreation leave or employer superannuation contributions. As a consequence, even during times of economic growth, real wages stagnated and secure full-time jobs became harder to find for those without higher qualifications. The public sector, traditionally providing stable jobs, also shrank or moved to short-term contracts due to outsourcing and austerity (e.g. contracting out cleaning, catering, etc., to private firms employing staff on lower wages). While U.K. unemployment fell to low levels (4% or below by 2018), under-employment and job insecurity remained relatively high14-16.
Union influence
A major factor in US wage stagnation and the rise in inequality is the decline in labour unions. Union membership in 1983 was about 20% of the workforce; by 2000 this had declined to 13.4%. This trend continued such that by 2024 only 9.9% of the workforce were union members. This decline has been especially steep in the private sector, where union membership only runs to about 6%17.
Neoliberal policies and employer strategies actively undermined unions – for example, the spread of “right-to-work” laws in many states (which weaken union funding), hostility to unions in private companies, and lax enforcement of labour protections by governments. This has led to very low collective bargaining coverage of U.S. workers, limiting workers’ ability to negotiate for higher wages or better employment conditions18.
For the working class, the decline in union membership meant loss of job security and bargaining power. Industries that once provided unionised middle-class jobs (manufacturing, transportation, even parts of the public sector) either shed jobs or deunionised. By the 2020s, most middle-class American workers relied on individual negotiations or employer benevolence, rather than collective agreements, to set pay and conditions. The consequences include lower wage growth, but also reduced entitlements and increased inequality19.
Trade unions in the U.K. have also declined, though more gradually than in the U.S. In 1980, union membership in the U.K. was around 50% of the workforce; by 2000 it had fallen to roughly 29–30%. Tony Blair’s Labour government (late 1990s–2000s) maintained most of the previous Conservative government’s union restraints, such as strict anti-strike laws, so the underlying neoliberal framework persisted and union membership continued to decrease. Since 2000, union membership continued to slide such that by 2023, only 22.4% of U.K. employees were union members. As in the U.S., the decline in union membership was steepest in the private sector, where it is now only about 12% (it is still about 50% in the public sector)20.
Workplace agreements increasingly happened on an individual employer basis, and collective bargaining coverage fell, with only ~26% of U.K. workers covered by collective agreements now, compared to 70–80% in the 1970s. This, as in the U.S., has led to a surge in inequality20.
Sources
- https://blotreport.com/2025/05/19/the-inevitability-of-a-trump/
- https://data.worldbank.org/indicator/SI.POV.GINI?locations=US
- https://data.worldbank.org/indicator/SI.POV.GINI?locations=GB
- https://www.pewresearch.org/race-and-ethnicity/2024/05/31/the-state-of-the-american-middle-class/#:~:text=In%202022%2C%20the%20median%20income,up%20from%202.2%20in%201970.
- https://equalitytrust.org.uk/how-has-inequality-changed/
- https://ifs.org.uk/articles/income-and-wealth-inequality-explained-5-charts
- https://www.epi.org/publication/charting-wage-stagnation/
- https://www.usa.gov/minimum-wage#:~:text=The%20federal%20minimum%20wage%20is,applies%20to%20covered%20nonexempt%20workers.
- https://www.resolutionfoundation.org/publications/wages-are-flatlining/
- https://papers.ssrn.com/sol3/papers.cfm?abstract_id=5155227#:~:text=Abstract,the%20future%20of%20gig%20employment.
- https://conversableeconomist.com/2024/12/12/the-changing-us-labor-market/
- https://wol.iza.org/uploads/articles/584/pdfs/the-labor-market-in-the-us.pdf
- https://www.pewresearch.org/social-trends/2024/12/10/key-labor-force-trends/
- https://researchbriefings.files.parliament.uk/documents/CBP-9366/CBP-9366.pdf
- https://www.ons.gov.uk/employmentandlabourmarket/peoplenotinwork/unemployment/timeseries/mgsx/lms
- https://learningandwork.org.uk/what-we-do/employment-and-social-security/labour-market-analysis/january-2025/
- https://www.statista.com/statistics/195349/union-membership-rate-of-employees-in-the-us-since-2000/
- https://www.bls.gov/news.release/pdf/union2.pdf
- https://www.pewresearch.org/short-reads/2024/03/12/majorities-of-adults-see-decline-of-union-membership-as-bad-for-the-us-and-working-people/
- https://assets.publishing.service.gov.uk/media/665db15a0c8f88e868d334b8/Trade_Union_Membership_UK_1995_to_2023_Statistical_Bulletin.pdf
Very comprehensive. Thank you.