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What people earn(99 Posts)
Today's FT has a fascinating examination of income over 40 years from various jobs and professions:
The fractured middle: UK salary split sees übers pull ahead
A deep divide has opened among Britain’s high earners, with an “über-middle” elite reaping the rewards of globalisation while millions of “cling-on” professionals struggle to sustain a middle class lifestyle.
An analysis of almost 40 years’ worth of data on salaries for the Financial Times has found that a large, highly qualified group has slipped down the economic league table. The findings starkly illustrate the growing inequality, driven by the highest earners, that policy makers are grappling with. President Barack Obama has identified the divide as a central theme of his second term.
In a week when the Bank of England issued bullish forecasts for economic growth, capping the most sustained run of upgrades since it gained independence in 1997, it will also raise questions about which groups are reaping the spoils of the recovery.
READ FULL ARTICLE HERE: t.co/r1wg1tiM82
[POST EDITED BY MN FOR COPYRIGHT REASONS]
LauraBridges…The City clearly bumps up London’s salaries, especially Investment Banking, which has been responsible for world growth over the past 30-years, that could have been located anywhere in Europe, but based in London brought in a annually a huge amount of various taxes to the UK – between £70 to £100 billion pre crash.
This is especially true when adding in all the taxes (income, VAT, Corporate) from the support services from law firms to wine and sandwich bars.
FYI much of the huge annual budget deficit of £150 odd billion the UK had in 2010, was due to this to the decline in tax revenues from the City from late 2007 onwards, so I’d suggest the moral high ground of sending them elsewhere to pay their taxes, is no quick and easy solution to reduce inequality, far from it.
Looking at the annual average salary of those working in financial services, the £102,000 figure is disingenuous at best. As averaging out the pay of an Investment Bank where the top 10% will bring home £millions (for making their employers many million more), if anyone thinks that the small army of back office clerks several times the big earners numbers, the messengers and telephonists ALL earn £102,000, it surely makes no logical sense. Arguably many of these clerks have a better inequality claim.
Clearly ‘making things’ is preferable, and that has changed in all western countries over the past 30-odd years away from heavy manufacturing, to more specialised ‘stuff’ the mass producing Chinese factories and workers workers on 20% of our salaries couldn’t do – but funny enough due to inequality in China, their workers have been getting 20% pay rises (from a very low base) – so we are in a much better position to get those jobs back, now and over the next few years, if businesses invest here.
But we have too remember that there is no god given right to British manufacturing jobs in the UK, as although it remained at around 22% of our economy for many years until the early 2000’s, it had fallen to around 11% in 2010, much of it prior to 2005.
France under a socialist government, after the crash, chose to enlarge the State and raise taxes to pay for the increase public sector costs and annual deficit reduction, but it’s not going well as some of these links explain; the last unemployment rate I saw in France was around a record 12%, versus over 7% here.
France’s Hollande tried to stop factories closing by law; a short term remedy, unlikely to encourage new businesses to risk their capital there.
My point is there are no easy answers to inequality, which rose slightly from 1997 to 2010, but rule of thumb I’d suggest best to concentrate of creating private sector jobs, rather than taxing what we have to death - as that doesn’t help the employment figure, or the taxes generated needed to help the unemployed and fund what social services we have.
Why create private sector jobs only? The state also has role to play. The private sector won't provide basic infrastructure or safety nets which is where the state can and should be.
The pulling away of the uber rich is worrying.
The FT is pretty left wing. It has a whole page in today's issue inside with more detail on these points. It's a good topic.
I won't have the views of most mumsnetters. I don't think inequalities are a problem as long as there are few in absolute poverty.
The interesting part is that lecturers and teachers and engineers used 40 years ago to be earning similar amounts to lawyers, doctors, bankers and not now. I suppose there have always been radical changes. In the 1800s we had the industrial revolution and suddenly the man owning the local mill or the man with sugar plantations in Jamaica became so wealthy he could build a massive country estate.
I was pointing out the thread simply so that mumsnetters can advise their daughters and sons which are good jobs to get.
TheGreatHunt…RE ”why create private sector jobs only” and your point of the necessity of the public sector; I’d say the answer is that the Public Sector should be as big as it NEEDS to be, as the larger it gets the more expensive it costs to run e.g. every job is 100% tax funded regardless of any tax they pay ‘benefit’ – and punitive taxes to pay for an inefficient Public Sector will shrink the private sector businesses/jobs and individuals salaries, many of whom can’t afford it.
Responsible governance therefore should at all times be checking if public expenditure is too large, as if it is, wasteful government not only has implications for current budgets/taxes, but also future ones as well – all the time taking money out of the real economy who shouldn’t have to see taxes rise for bad government spending.
Using examples, there is an argument that in 1997, still paying for the early 1990’s recession, Public Sector employment of 5.2 million was too tight, but did it really need to rise by over 1 million by 2010, while private sector jobs funding them had been falling by hundreds of thousands since the late 2007/8 crash? Especially as the sheer size of non productive and many high salaries Quangos, not a figment of right wing newspaper imagination, multiplied over that period.
Add to that the benefits bill was rising enormously, when benefits like Unemployment should have been falling a lot during what Mr Brown kept telling us was record UK employment numbers - as they had through every other long period of high economic growth – and we are not only building up taxpayer problems for now, but for the future as well.
Take Public Sector pensions as an example of the need to keep employment numbers where they NEED to be and the future strains on annual government budgets - these total figures are ON TOP of the current National Debt of 1.3 trillion and future government have to budget for the payments when come due.
“Most of the government employee pension liabilities of £1.2 trillion are unfunded, as only £0.3 trillion of them (largely in the Local Government Pension Scheme) are being run on a funded model. This represents a huge burden which the present generation is passing on to its children and grandchildren down the line.”
The problem is when the State thinks it can spend your money better than you can,, especially in a period where taxpayer money seems plentiful and the extra spending on day to day government services, rather than infrastructure etc who’s contribution to economic growth lasts, it is invariably wrong.
When it is wrong, taxing the rich won’t even cover the interest charges on the debt (currently over £50 bil a year on the national debt with low interest rates where they are), so EVERYONE ends up paying directly, or indirectly.
I would be interested how they came to this bit: "Now the average London financial services salary is about £102,000 including bonuses while academics are paid about £48,000, natural scientists average about £42,000 and mechanical engineers £46,000."
If it is a mean, then the few people earning millions and millions will be driving it. One person on £50M is going to drag up the average for 100s of people who are earning much less than their "average".
Finanical services people in London are working in roles like admin, accounts, working on phones etc and loads of roles which are loads less well paid. Even in the middle in many places you aren't going to be earning at that level - the averages of £42K / £46K are not unlikely.
I think that a very few mega-earners and a fair few people with salaries that people still think of as being very generous are pushing this up. Plenty of people working for financial services companies in London on salaries in the £20K & £30K.
Having said that, the general points raised in the piece about how earnings potentials have changed in different professions / industries is interesting and true. The teachers one for sure.
Also the disparity between London / elsewhere in pay in general. But given the cost of living difference, I suppose the difference in standard of living might be more relevant? London has some of the poorest, and largest poorest, areas in the UK.
I think it's pretty accurate research. My daughter is a lawyer and she's on well under £100k in her 20s but not much under. Her husband, a banker, will be on over £100k.
Many teenagers are encouraged to do STEM degrees - engineering etc. That is not a bad choice. If you do maths and then work for a hedge fund you can do pretty well. Obviously medicine and law are good choices currently. You need to think about a 40 year career however so it is picking what might be well paid over the 40 years not just the next 3 which will matter.
On the high paid mothers thread a good few women are on £100k+ so it's not that rare and they tend to be consultants, lawyers etc. I don't think any doctors joined the thread but some will be on that level (my sibling is)
The FT continues... although I cannot type the umlaut:
"Uber or cling-on: where do you belong?
The professional middle class has divided into two groups, with very different fortunes.
To claim this status, you will need to be comfortably in the top 5 per cent of all national earners. This bracket starts at about £69,000 a year but you probably earn considerably more, in a top flight financial services job or in medicine. You are far more likely to work in London than any other part of the country. Experian, the consumer information company, suggests you will have a house with five bedrooms or more, in the most exclusive neighbourhood, or an expansive country pile with easy transport access to the UK’s major cities.
Once, you could realistically aspire to a place among the top 10 per cent of British earners, earning at least £54,000 in today’s money. Now, if you are, say, a teacher, architect, mechanical engineer or natural scientist, you have seen your profession’s presence in that bracket dwindle or die over the past 40 years. With private school no longer an option, you will seek out the catchment areas of good state schools. Relatively less prosperous than your counterparts a generation ago, you can still afford to live in desirable suburban neighbourhoods in traditional three to four bedroom homes, suggests Experian."
I didn't say the state should be huge. I said it has a role to play.
The way governments slavishly follow the free markets model without clear evidence is worrying. Beyond worrying.
The benefits bill has increased mainly because of the greater proportion of pensioners and tax credits. Tax credits which are there to prop up low wages paid by the private sector. I find it perverse that companies happily fund huge pensions and bonuses for those at the top yet bkest about the minimum wage. This is not right.
The private, public and third sector all have roles to play in a successful economy. Anyone who thinks that one is better than the other is mistaken.
People cite the public sector as being bloated and inefficient - which it certainly is in some respects, but we only know because its failures are laid bare in a daily basis. How many private sector firms waste money we will never truely know because it is hidden from view. You get the odd glimpse but never the full picture.
There are very few people at the top. That is one reason we had to abolish child benefit for man yin the middle etc. We have already increased tax for the highest 1% to the biggest tax tax in British history - 1% of us pay 30% of the tax bill. There is just not much money to get from that tiny number of better off people. So the answer is a much smaller state in my view although I am sure that is not the view of the FT which is always a little left wing on these matters.
lol- 'FT is pretty left wing'...
Yeah, why wouldn't the Financial Times, a broadsheet for financial investors be 'left wing'?
Of course, the FT is left wing and so is the Economist. They represent the progressive elite, just like Blair did.
They are not communist left wing, just Blairite New Labour left wing.
I think it is very sad to see who the highest earners are - consultants and lawyers and bankers. It shows how we have declined, but in a way it was always thus.
Our country has always been dominated by the City of London. Even over 100 years ago there was a battle between the London financiers and the great Northern engineers. Some engineers never received enough capital as the financiers invested overseas for a greater return, and yet our ingenious engineers still provided so much that made our country great.
Now we have ruined our manufacturing industry and our engineering talent has declined. While quangocrats and consultants and lawyers with degrees and PhDs in English Literature and Origami earn hundreds of thousands, engineers earn nothing similar.
We ask the Dutch engineers for help and their pumps to help out with our floods. We don't make pumps like that ourselves, when once we were the workshop of the world.
Even in the crap that is 'green crap' and the laughing stock that is windmills that our clique of ex-barrister politicians promote, many of the large windmills are not made in Britain, we import them from abroad.
Our tiny elite of barristers, lawyers, consultants and financiers think that their services will be needed in a globalised system that will rule the planet. But they can't see what lies ahead and when the globalised experiment created by the global elite fails, we will have nothing to fall back on - just barristers, 'human rights lawyers', 'environmental lawyers' and windmills.
How different the industrial powerhouse of Germany is to us and our coterie of lawyers, consultants and financiers. Germany will prosper while we decline even further thanks to our out-of-touch elite with PhDs in Origami.
I can understand why bankers earn millions in their casino gambling racket. But, LauraBridges, can you explain to me why a "human rights lawyer" can earn £600,000 a year, and an "environmental lawyer" can earn £200,000 and a quangocrat with a PhD in Origami can earn £100,000 a year for a 3 day week?
They may be raking it in now, but as our decline accelerates and as other countries rise, our tiny elite will not be so lucky and of course nor will the rest of us be either.
Human rights lawyers tend to earn a pittance. it's business lawyers who can (the very very few who are good enough ) who earn the most.
It's a world market. If the British engineers are so good there is nothing to stop them going to work in Germany. My ancestors left countries to get work - it's always been so.
Lots of British engineers are good and do work abroad, but they shouldn't have to. We should be investing here and creating the technologies of the future here.
You don't even know the terms you're using claig.
I take it you don't like my use of the term "progressive elite" as if progressives could not be part of an elite.
I know more than I want to about the terms Blair, philanthropic foundations, progressive politics and the New Labour pressure group called "Progress". I have read the message by Tony Blair on their website.
It's not the human rights lawyers, environmentalists, and unions who are the cause of the UKs problems - and they most certainly are not part of 'the elite'.
Calling these groups part of 'The elite' is shameless right-wing populism which relies on ignorance.
Tony Blair is not a 'progressive'. 'Progressives' don't wage illegal and immoral wars on foreign countries for oil and kill 100,000 people. By no definition is that 'progressive'.
You're obsessed with the word 'progressive' because you're confused and you attach this label to anyone whom you perceive to be part of the elite - and you're not even right about who forms 'the elite', either.
Tony Blair calls himself a "progressive" and the New Labour presure group called "Progress" says this about itself
"Progress is the New Labour pressure group which aims to promote a radical and progressive politics for the 21st century. Founded in 1996, we are an independent organisation of Labour party members.
Through our national and regional events, website and regular publications, we seek to promote open debate and discussion of progressive ideas and policies."
and it proudly displays what is called "A Message from Tony Blair"
I don't think they are liars, and I think that Blair is a "progressive". he is certainly not a Conservative which is why Conservatives didn't vote for him.
I didn't mention "unions". They aren't an elite of any type. They are organisations of working people.
"Human rights lawyers" and "environmental lawyers" aren't the "progressive elite". They just benefit from their policies.
And the Progress pressure group and Blair aren't the "progressive elite" either. They are just progressives.
The real elite is the bankers, billionaires and hedge funds, and Blair got a role with them later on. And LauraBridges is right that the FT is left wing or progressive too, because it represents the ruling elite.
As an engineer I would be fucking delighted with £46k. I'm chartered, 15 years experience, and my FTE is nowhere near that.
Exactly, WoodBurnerBabe. The priorities are all wrong.
We need more engineers, more manufacturing and more industry - not more services.
But of course, it won't happen, because the real hidden policy is one of de-industrialisation and "limits to growth" as outlned in the Club of Rome's document in the 1970s which kickstarted the whole green agenda.
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