In developed countries across Europe, Asia and North America, rich workers are becoming ever more segregated from the less well-off. Photo / File
In developed countries across Europe, Asia and North America, rich workers are becoming ever more segregated from the less well-off. Photo / File
Opinion by Pilita Clark
Pilita Clark is an associate editor and business columnist at the Financial Times.
THREE KEY FACTS
CEO income in New Zealand is growing at twice the rate of worker income, according to Associate Professor Helen Roberts at the University of Otago.
The United Kingdom and United States have among the highest levels of social inequality in the OECD, measured by the Gini coefficient.
New Zealand is less unequal than those two countries but more unequal than France, Canada or Ireland, according to the OECD.
Does it matter if your boss is rich?
This is a question I have thought about only rarely over the years, mostly when non-rich friends have reported unexpected misunderstandings with wealthier bosses.
There was the Australian woman whose patently baffled new manager listened to her explain thatshe had to leave work at a set time each afternoon to pick up her kids from school before asking her: “Why don’t you just get a nanny?” She explained that alas, that would be tricky on the salary his firm was paying her.
Another friend who could only afford a property miles from the office surprised her richer boss, who lived closer to work, by revealing how much money she had saved on train tickets by working from home during the pandemic.
Then there was the executive who invited his team to his sprawling home for a morning meeting and ushered them into what turned out to be not the dining room, nor the kitchen, but the “breakfast room”, a space devoted entirely to breakfasting that was bigger than the apartments of most of his guests, none of whom had heard of such a room before.
I was reminded of all this when I came across some recent international research that helps to explain why these moments happen – and why they may be about to become more common.
In developed countries across Europe, Asia and North America, rich workers are becoming ever more segregated from the less well-off.
Within industries and inside individual companies, there has been a “dramatically declining exposure of top earners to bottom earners”, say the authors of The Great Separation paper published late last year.
Consider France. In 1994, the top 1% of French earners worked in places where 9% of their colleagues were in that same top income group. By 2019, that 9% share had nearly doubled to 16%.
The bigger the top tier of earners, the less likely it is that they mix with the lowest-paid workers, Pilita Clark argues. Photo / 123RF
In the Netherlands in 2006, the top 10% of earners worked where about 25% of their co-workers had similar incomes. By 2020 that percentage had risen to nearly 30%.
The bigger the top tier of earners, the less likely it is that they mix with the lowest-paid workers.
There are many reasons why this is happening, starting with the decline of industrial jobs.
Factory life brings blue-collar workers together with supervisors, engineers, managers and executives. It’s different inside a bank, an insurance firm or a software developer.
Outsourcing or offshoring jobs such as data-entry or payroll clerk roles deepens the divide, by removing chunks of lower-income workers from the office.
So does the rise of digitalisation, which automates low-paying jobs away. This trend underlines a reason why wealth segregation may be set to grow.
The research for the paper began many years ago, says co-author, Professor Halil Sabanci of the Frankfurt School of Finance & Management.
This was before ChatGPT and other types of advanced artificial intelligence were unleashed in the workplace. Sabanci thinks it makes sense to expect AI to accelerate the wealth segregation that digitalisation has already driven at work.
All of this could have profound political consequences.
Sabanci and his colleagues suspect the isolation of elites at work may have already helped breed resentment among poorer workers who read or hear about the lives of top earners, but rarely see or meet them.
Support for right-wing populists such as Marine Le Pen has increased in some countries in recent years. Photo / Supplied
“This situation could increase feelings and experiences of being left behind, ignored, and misunderstood,” they write, adding that this could in turn have helped to fuel Trumpism and other forms of populism in Europe.
Voter polarisation between wealthy capitals or coastal cities and struggling hinterlands has certainly been a striking feature in a series of recent elections, from the 2016 UK Brexit vote to presidential battles in the US and France.
In 1988, Jean-Marie Le Pen’s 15.6% vote share in the Paris region was roughly the same as the 14.4% he got elsewhere, write some of the paper’s authors in earlier research.
Thirty years later, support for the right-wing populist leader’s daughter, Marine Le Pen, declined to 12.5% in Paris but rose to 27% elsewhere – nearly double her father’s vote share.
This change was of course not caused solely by the widening separation of top earners from the rest of the workforce.
But it is easy to see that this segregation could have fuelled the shift, and may well be about to accelerate it further.
