Last week’s UK elections put the Conservative Party firmly back in power. What does this mean for the ‘man on the street’, for teachers and carers? To clarify the economic backdrop, PhD Fellow Mary Kaltenberg examined wage distributions across the UK. The story she found is stark: a little over a third of the country are in the top earners bracket, while just under a quarter are stuck on — or below — the minimum wage.
My first stop was the UK Office for National Statistics and their annual survey of hours and earnings. From the latest available data (2013) I cannot show exact distributions of pay, i.e. how many people earn a certain wage category. Instead, I will show you what we know: employment totals, wage distribution in deciles, median wages and percent of people who earn less than the minimum wage — all by occupation.
1. The Super Manager & Super Airplane Associates
The wealthiest professions in the UK include those many would assume are top earners: the managerial class, engineers, doctors, lawyers (considered public service professionals), the Mad (Wo)Men (advertising), and businessmen (Figure 1). Corporate managers and directors are by far the most well paid of any job in the entire occupational spectrum. Similar to the argument of Piketty on super-managers, these chief financial officers (CFOs) are clearly making way above their marginal rate of return. Surely, a cap on their income is necessary to curb the rising income inequality in the UK, especially since this group is only 8% of the total workforce.
We can break this group of Top Earners into more detailed occupations as seen in Figure 2 (with some missing data at the 90th percentile). In this picture, not all managers are paid alike in the UK. Chief executives and senior officials make significantly more than other types of managers, including financial managers (which was a surprise to me). Even if you are among the managerial class, there is still quite a difference of income between a CFO and a director. It’s important to keep in mind that financial and functional managers are among the top 5 wage earners compared to the rest of the workforce.
What was more shocking in the UK occupational data is the pay of airline industry controllers, engineers and pilots (transport associate professionals). They make up a significant part of “business and public service associate professionals.” In fact, those in the shipping industry make much less and pull down the average wage of this occupational group. In Figure 2, you can see that they follow the CFO trend. I am not sure why this is the case. For those who know the UK labour market better than me, what do you believe is the cause for airline industry controllers, engineers and pilots to be top earners?
2. The Backbone of the UK Economy
The majority of occupations in the UK share a similar decile distribution pattern with most occupations having a starting salary of between £80 and £330 per week (Figure 3). These are your secretaries, bus drivers, plumbers, nurses, the guy who you call to fix your internet (customer service), build your houses, take care of and teach your kids, provide you a comfortable flight (stewardess), among many other service jobs. This group also includes manufacturing: the UK provides those in textiles, metal work, etc. with a living and affordable wage. The age of the decline of the manufacturing job is NOT happening in the UK as these occupations make up 11% of the total employment in the UK and provide decent pay.
There are two oddly positive exceptions. First, teachers seem to start off at lower paying salaries, but after the 30 percentile group, they start to earn a lot more income. This is great news – teachers educate our future workforce. The second oddity is how much protective services earn. Police officers are not among the top earner group, but they have much higher starting salaries and remain earning more than the rest of the backbone workforce of the UK.
3. Minimum Wage Earners
These are the people who dry-clean your clothes, deliver your mail, clean your windows, wait your tables, clean your streets, sell you things, give you your prescriptions, and most of all, take care of your pets, young children, parents (or grandparents) and assist paramedics and dentists. These are mostly service industry occupations, with a majority in the care industry (Figure 4).
While I do not have distributional data, what was available was the percentage of employees that earn below the minimum wage. These categories had the highest percentage of any other category (between 1.2 and 2%) who earn below the minimum wage. Also, these occupational groups have the lowest median wages: caring personal service (£248.2 per week), elementary admin & service (£192.4 per week) and sale occupations (£192.4 per week). Similar to the US story, these workers will not see a rise in their income unless the minimum wage increases — because their wages are being pushed to the floor. Don’t these individuals, who care for your loved ones, deserve decent pay?
These minimum wage earners with only three groups of occupation classes make up 24% of the entire workforce (Figure 6). Nearly a quarter of the employed are struggling and the only protection they have is minimum wage increases. The only way for their wages to keep up with rising costs of living is by pairing minimum wage with inflation. It not only provides decent pay for the workforce, but also reduces the burden for the UK government. If minimum wage continually increases, this keeps a population from being vulnerable from price shocks and less dependent on state subsidies. Let’s push for fair pay for all. Let’s ensure that if you have a job, you can earn enough to be independent and secure.
Flickr / cybrarian77