The FINANCIAL -- Just 20 professions have been responsible for more than two-thirds of
the growth in wage inequality among men in recent decades a new study
male_professionalChief executives of large organisations benefitted most, seeing their pay rise fourfold - faster than in any other occupation in Britain. Salaries in other already highly-paid jobs, including finance and medicine, also increased more sharply.
The analysis, ‘Occupations and British Wage Inequality, 1970s-2000s’, split the British workforce into 366 occupations and examined their pay levels between 1975 and 2008. It is published in the current edition of the European Sociological Review.
Author Dr Mark Williams of the London School of Economics and Political Science (LSE) analysed the three different ways in which occupations can affect wage inequality. Using a weighting system, he found that steeper wage rises in certain professions was the biggest driver, ahead of changes in the relative size of certain professions and increasingly unequal pay levels within professions.
The sharpest growth in inequality came between 1975 and 1996, with a more stable pattern thereafter.
For women, 12 professions account for half of the growth in wage inequality while the top 20 combined account for almost two-thirds of the growth in overall inequality.
Among men, the general managers (including chief executives) of large companies and organisations saw their mean hourly earnings (at 2008 levels) rise from £12.07 in 1975 to £49.20 in 1996 – the equivalent of a rise in annual salary (based on a 40-hour week) from £25,106 to £102,336. This group was responsible for more than four per cent of the national increase in wage inequality.
BusinessmanThe largest rise was attributable to marketing and sales managers who saw their mean hourly earnings rise from £11.27 in 1975 to £20.44 in 1996 – the equivalent of an annual wage increase from £20,511 to £37,200. At the same time the number of people working in the profession more than doubled to almost 450,000. The two factors combined meant the occupation was responsible for the single biggest rise in inequality, almost 10 per cent, over the period.
Dr. Williams, a fellow in LSE’s Department of Management, said: “My research clearly shows that the biggest single reason for the growth in inequality has been that highly-paid jobs have become even more highly-paid. This is also the first study to identify the professions which have had the biggest effect. It is very striking how just a handful of occupations, mostly managerial and professional, are responsible for more than half of the inequality increase.
“Previously many have argued that widening pay gaps within professions were the primary source of British wage inequality. This study shows that is not the case - indeed it’s the least significant of the three mechanisms by which occupations can affect the inequality of wages.”
Some of the top 20 inequality-causing occupations were less well-paid jobs, including goods vehicle drivers, kitchen porters and cleaners. In these cases, their contribution came not from sharp wage rises but because the number of people working in those fields increased – affecting the overall structure of the wages market by accentuating differences between low and high earners.
As The London School of Economics and Political Science reported, the data for the study came from the New Earnings Survey which samples one per cent of the UK workforce. Dr. Williams has analysed the data both in this paper and in associated research.