Add RF methodology for earnings growth #1179
Description
In every year, we model the wage floor, ensuring that no-one in our data falls below their age-appropriate minimum wage. We include some ‘spillover effect’ for those just above the wage floor. We also model the extension of the National Living Wage to those aged 21-22 in 2024-25 and (provisionally) to those aged 18-20 by 2029-30. We assume that the wage floor beyond 2025-26 rises in line with average earnings.
Beyond these changes, all employee and self-employed earnings are uprated equally in each year. Overall wage growth is constrained to match ONS figures for the outturn period and Bank of England (and later OBR) figures for the projection period, taking into account the effects of the wage floor and compositional changes. The Bank only provides private sector average earnings growth and we assume that this approximates average earnings growth going forward.
From https://www.resolutionfoundation.org/app/uploads/2025/06/LivingStandardsOutlook2025.pdf