This week an audience participant on Question Time, a British politics show, made the mistake of suggesting his salary of £80,000 (NZ$160,000) plus does not make him rich.
Social media outrage followed. That salary puts the man in the top 5 per cent of UK earners and, in the eyes of the other 95 per cent, he is rich. Why then doesn't he feel it?
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In fact, his take-home earnings are not as much higher than the average as a first glance suggests. The top quintile of earners in the UK are on an average of about £88,000. The bottom quintile are on more like £7,900. Add in tax and benefits, and those numbers fall to about £65,500 and rise to £19,000. That means the top fifth take home, on average, 3.4 times as much as the bottom fifth. That's significant, but much less significant than the 11-fold difference in pre-tax pay.
It's also worth noting that many of those in the bottom quintile are working part-time (35 hours a week on the minimum wage in the UK would bring in over £12,000), while many of those at the top are salaried and work much longer hours. That makes the hourly income differential even smaller. There is a similar dynamic at work in the US: there, 40-year-olds in the top quintile would see every dollar earned over their lifetimes taxed at about 34 per cent and those in the bottom fifth would see it subsidised by 47 per cent.
But several other things are going on as well. The first has to do with the way income changes during a career. No one is born earning £80,000, earns it for 40 years and then dies. Our income starts low, rises with experience and seniority and often falls again toward retirement.