Is it any wonder that Britain bubbles away with frustration? Not since Napoleon ruled France has the country suffered such a protracted squeeze in wages. Of the 35 major industrialised OECD countries, only Greece has endured such a steep fall. British workers are still, on average, poorer than they were when the banks plunged the global economy into chaos, and the respite of the last two years is juddering to an end. In February real wages fell once again. And no, this crisis didn’t start under the Tories: in the last half of New Labour’s reign, wages began to stagnate or fall for the bottom half of Britain’s underpaid workforce. Over a decade of decline has left Britain simmering with anger.

The story behind Brexit is a tale of competing and contradictory factors. Many low-paid workers opted for remain; millions of relatively comfortably-off Britons with no economic grievances, like those I met in the well-to-do market town of Fareham, voted to leave. The youngest have been hardest hit by the crash and the cuts, but they voted remain; older Britons have been largely protected, but they opted for leave.

But it is naive to dismiss the role of the great wage squeeze in Britain’s biggest political upheaval since the war. Imagine holding a referendum on the status quo when millions of your prospective voters feel poorer. Many looked at their bank balances, stared anxiously at unopened bills, saw their pennies didn’t go as far in the shops, and seized on the referendum as an opportunity. Why risk leaving the powerful with a complacent feeling that nothing is wrong when you can send them a message?

Owen Jones outside his old family home in Sheffield Heeley, where 57.6% voted for Brexit. Photograph: Gary Calton/The Guardian

Returning to Sheffield – my birthplaceand where I spent the first few years of my life – was a salutary lesson. Sheffield defied the trend of large cities like London and Manchester and narrowly voted to leave. In the constituency where I was born, Sheffield Heeley, the result was even more decisive: 57.6% went for Brexit. It’s difficult to disentangle this result from the fact Sheffield is the low-pay capital city of the country: its average hourly rates are 10% below the British average. Sheffield was once a thriving industrial city, Steel City, the home of “Made in Sheffield”. It never recovered from the decimation of industry under Thatcherism: in 1984, the year I was born, unemployment in the city surged to over 15%, and industrial suburbs with flickering furnaces were reduced to wastelands of weeds and fences. The lack of decently paid jobs has often fuelled anti-immigration sentiment across Britain, a decisive factor in the referendum result – which is exactly what I found in my old community.

At Gleadless Valley, an estate up the road from where I grew up, a 78-year-old ex-trucker from Newcastle, a St George’s flag tattooed on his arm, queues for a cash machine. “There’s too much cheap labour,” he says, as he explains why he voted to leave. “It’s cutting our lads down.” His grandson and children have all registered as self-employed “because there wasn’t any jobs”. They’re shopfitters, turning old supermarkets into gyms and the like. “Of course the Poles and what have you are cutting their jobs down because they’re taking them at half the price.”

Chatting outside a shop I meet 37-year-old Kimberly Jackson, who works in a bar, and a 41-year-old hairdresser, Cheryl Corn. Neither voted in the referendum, but both agree that “no one’s got secure jobs any more I don’t think, they don’t have enough money”. The role of immigration triggers a fascinating debate between them. “I’d stop foreigners coming in,” says Kimberly, “because nobody’s got jobs here. Foreigners take them and work for £4 an hour.” But Cheryl interjects: “That’s not foreigners’ fault though, is it?” For her, the blame should be directed at employers.

Countries like Germany have abandoned the religion of ‘let the market decide' and created hundreds of thousands of jobs

Cheryl is right, of course. The research on immigration does suggest it can suppress wages at the bottom end of the labour market. A statutory living wage, proposed this week by Labour, stronger trade unions, cracking down on precarious forms of employment, and compelling employers to employ all workers on the same terms and conditions would all undoubtedly help.

Sheffield also showcases the need for an industrial strategy. Countries including Germany have abandoned the religion of “let the market decide” and intervened to promote renewable energy, creating hundreds of thousands of secure, decent jobs backed up with apprenticeships.

In cities such as Sheffield, low-paid and insecure jobs have filled the vacuum instead. A young woman speaks to me as she pushes a pram. She was a duty manager at a supermarket. Even though she had many responsibilities and “worked all the hours God sent me”, she languished on the minimum wage. They make a lot of money, these big supermarkets, I say. “Yes – off people like me, working their arses off.”

Sixty-two-year-old Alan, who voted to leave, works in Ladbrokes betting shop. Before that, he worked in the city’s steel industry for over four decades. “The industry up north has gone now,” he says mournfully. His 34-year-old colleague Katy lived on both sides of the tracks in Sheffield. “On one side they voted to remain, and the other to leave, it has to be a class thing.” If there were more secure jobs, better wages, more affordable houses, would people have been less likely to vote leave? That provokes a passionate response from Alan. “Wouldn’t you be less likely to be more radical if you had a job, a secure job, a roof over your heard, food to put on the table for you and your kids?”

Brexit is a puzzle with many pieces: Sheffield is an important part of it.“There’s nothing particularly unique about Sheffield,” says energetic local MP Louise Haigh – elected at only the age of 27. “Sure, it’s bottom of the pile in terms of pay, and there’s a feeling of exasperation and wanting to give the establishment a shake-up.” Sure, the anti-immigration backlash can’t just be reduced to frustration at shrinking pay, but it certainly partly explains the intensity of feeling. But what now? Those who voted Brexit will soon notice their wages are shrinking again. Outside the shop, Cheryl and Kimberly have already noticed. “I don’t think we should have come out – everything’s going up in price now,” she tells me.

Without an inspiring message from the left, the danger is that backlash against immigrants will grow. Blaming foreign workers for shrinking wages is, after all, a simple and easily digested message. Whatever Labour’s future, a return to a stale centrism that doesn’t understand people’s anger surely isn’t it. “All those people who voted leave might not vote for us again because this was their big opportunity as they saw it to send a message,” Haigh tells me. “If we fail to listen, we’re done for.” And she’s right.