“Average earnings rose 1.7 per cent compared with a year earlier, nudging ahead of March’s 1.6 per cent consumer price inflation rate. That was the first rise in real wages after a six-year squeeze.” Financial Times, May 15

I’ve had a 0.1 per cent pay rise? The Dom PErignon’s on me.

You’re underwhelmed.

You’re not?

Yes and no. The decimal places in those wage and inflation estimates give them an air of precision they don’t deserve. One shouldn’t get hung up on either figure — let alone the exact size of the gap between them. In any case, the Office for National Statistics pumps out a whole range of wage and inflation measures that you can mix and match to change the story. You could point out pay growth after bonuses was only 1.3 per cent, for instance, or that inflation based on the retail price index was 2.5 per cent. Use those measures and real incomes actually fell. What’s more, the most widely watched ONS pay surveys do not cover the 15 per cent of workers who are self-employed.

No wonder Labour and the Tories keep coming up with contradictory statistics about the “cost of living crisis”. Sounds like I’m right to be underwhelmed.

It’s easy to be cynical, but if you filter the signal from the noise it is pretty clear that real wages — having fallen relentlessly for six years — have reached a turning point. I’m not saying that means everything is fine again: pay packets are still about a tenth lower in real terms than before the crash and they’ll probably pick up slowly. Employers can’t afford big pay rises unless we become more productive in our jobs. So far, we’re not doing too well on that score. But at least things have started to get better.

So, earnings are rising faster than prices — I’ll give you that. Still, people don’t exactly feel flush with cash. Are you sure we’re back in clover?

It’s a fair point. Politicians obsess over these numbers, but you can’t use them as a proxy for living standards. For a start, data on gross wages don’t tell you much about take-home pay. And pay isn’t the only source of income. Four out of 10 adults don’t work at all but they’re not queuing up at food banks. You need to take account of benefits, investment, private pensions and property income. And if you care about people’s living standards, you probably want to look at household incomes rather than what each person is paid.

And if you do all that?

The picture actually looks pretty similar. Median household real incomes have fallen about 6 per cent since the crash, but they’re forecast to rise a little this year. So, we’re not rolling in clover, but neither are we stuck in mud.

Depends what you mean by “we”. Averages mask big differences between how the rich and the poor are doing.

Not in this case. The pain of falling living standards has been remarkably evenly spread across the income distribution. So far, we really have all been in this together. That might start to change as wages recover, however. People who rely on benefits for more of their income seem likely to fall behind. The government has decided to increase benefits by only 1 per cent a year, even if inflation is higher. And there’s probably more pain on the way. We’re still less than halfway through the coalition’s planned spending cuts.

And you’re only talking about incomes, remember. What about wealth?

I see you’ve read your Piketty, but you’re still barking up the wrong tree. There’s huge wealth inequality in the UK but it hasn’t worsened since the crisis. The real story over the past six years is the widening generation gap. Unlike the rest of the population, the living standards of sixty and seventy-somethings have kept on rising. Older people are amassing more wealth, too: more than a fifth of 55-64-year-olds are millionaires, up from 16 per cent before the crash. London homeowners are particularly happy campers as house prices touch the sky.

So come election day next year, how will people answer Ronald Reagan’s famous question: “Are you better off than you were four years ago?”

Most of us will have to say “no”, although unless we’re very poor we’ll probably feel the worst is over.

And the ones who say “yes” will probably be older homeowners who live down south?

You got it.

I wonder who they tend to vote for.

— Financial Times