Why is Britain not working?
Kate Andrews
The Spectator
If workforce participation in Britain had remained at the 2019 rate, the economy would now be 1.7% larger, rather than shrinking, says Kate Andrews. Before the first lockdown, workforce participation was 79.5%, the highest since records began. Today, 5.6 million are out of work and – crucially – not looking for a job. The national character can’t have changed in that time, so what explains it? Mental illness is a big part of the problem. In all, 53% of those registered as long-term sick in January 2023 did so for depression, nerves or anxiety; most will have been signed off work. The waste of human potential is a “scandal”, as is the cost. The expected rise in welfare costs alone equals the total cost of the Foreign Office. At the same time, rich and poor alike are being disincentivised from working. A single parent working 30 hours a week stands to lose 76p of every £1 earned in extra work due to the loss of benefits. Those who earn between £100,000 and £125,000 risk being drawn into the 62% tax bracket, at which they lose their personal allowance. Those who have children have to earn less than £99,999 to qualify for “free” extended childcare (why do high earners even qualify?). It’s a mess, yet there’s scarcely an MP who will talk about it.
Step away from the benefit cliff
Katherine Cramer and Jonathan Cohen
The New York Times
A US-wide survey conducted for the Commission on Reimagining Our Economy finds that many Americans think that those in charge are greedy and that the economy is “rigged against them”, say Katherine Cramer and Jonathan Cohen. For them, greed is not an abstract concept; it is rising food prices and rent. There is a “clear disconnect between the macroeconomic story and the micro-American experience”. In reality, income inequality has fallen in recent years and a tight job market has led to “historic gains for lower-income workers”. Yet many we spoke to, particularly from black and Hispanic households, cannot afford to save and are one medical bill away from financial disaster. What would help? A good starting point would be to address benefit cliffs; for example, in Kansas, a family of four is eligible for Medicaid if it earns under $39,900. “A single dollar in additional income” leads to forfeiture. Removing these cliffs for healthcare, childcare, housing and food assistance programmes would allow millions to feel more secure. Americans want control over their lives, resiliency and “a s
