Research by the Centre for Economics and Business Studies for BBC Panorama found that the average British worker earns £20,149 once tax had been deducted, a drop of 5% on their income in 2009.
Once inflation was taken into account, the buying power of pay is lower now than in 2004.
Separate research by the Institute of Social and Economic research revealed that an estimated 659,000 households are already struggling with mortgage payments, while 117,000 people are in arrears.
It said that 36,000 households would struggle if the Bank of England’s interest rate were to rise by 1% to 1.5%.
The squeeze in living standards has been made worse by workers being too afraid of losing their job to ask for a pay rise.
Former Monetary Policy Committee member David Blanchflower told Panorama: “One of the bleak things going on right now is that people are very fearful of losing their jobs. They’re worried about the austerity that’s coming, and that’s especially true of people in the public sector.
“Company profits have been also relatively low so the ability of firms to pay has actually prevented wages from rising.”
The research found that those working in finance and insurance have been hit the hardest, losing an average of £101 a month from their take-home pay, followed by construction workers who have lost £99 a month.
A spokesperson for the Centre for Economics and Business Studies said: “Annual growth in public sector take-home pay has remained robust, although we expect this to change with the introduction of a pay freeze in the 2011/12 financial year.
“Even those industries which are experiencing the strongest increases in take-home pay relative to last year are suffering real-term declines in spending power due to the high level of inflation. If these trends continue, the average level of real disposable income will continue to be eroded.”
