Years of recession and then low growth, inflation and slow productivity growth since then have combined to dampen pay growth and living standards, reports The Telegraph.
But now, even after taking into account price rises and changes to family composition, disposable incomes are at a record high, according to the Office for National Statistics.
The median household earned £26,400 after direct taxes and benefits in the financial year ending in March, up £700 on the previous year, and £400 above the previous high of £26,000 in 2007-08.
The biggest increase was enjoyed by retired households, whose disposable income of £21,500 is up £1,700 on the 2007-08 level.
Working households still have some ground to recover, with an average disposable income of £29,200, which is £400 short of the pre-crash level.
Economists are worried, however, that the fall in the pound since the EU referendum could cause a spike in inflation as imported goods become more expensive.
“The already sluggish growth in nominal wages will probably slow sharply, reflecting weaker labour demand and a reluctance of employees to bargain hard for wage increases,” said Kallum Pickering from Berenberg Bank.
“With inflation rising to at least the [Bank of England’s] 2 per cent target by early next year, real wages are likely to fall during 2017.”
Meanwhile official figures showed the average worker received wages of £501 per week in the three months to June – a rise of 2.4 per cent on the year.
Public sector workers are paid slightly more than those in the private sector, but the gap is closing rapidly as the Treasury’s purse strings remain under a tight grip.
The gap in pay opened up in the financial crisis, when the pay of Government workers was protected more than private sector salaries.
But seven years on, the gap has almost closed.
Private sector workers were paid 5 per cent less than those in the public sector by 2011, and the gap even spiked to 7 per cent in 2013. But tight control of public spending and a sustained reduction in state employment has reduced the gap to below 1pc now.
Earlier this year private sector workers briefly earned more than those in the public sector for the first time since January 2009.
Construction workers received the biggest pay rise with wages up an average of 8.4 per cent in the past year. Those in finance and business services earned a 2.6 per cent raise, while the average public sector worker’s pay went up by only 1.7 per cent in the past year.
