Figures from the Annual Survey of Hours and Earnings (ASHE) published last week have shed a bit more light on the job polarisation question. Those clever people at the Resolution Foundation have added the ONS figures to this interactive gizmo so that you can see the effect of the fall in wages on different groups of workers.
Since the recession, pay has fallen in real terms among all groups but the median hourly wage for professional occupations is now lower, in real terms, than it was in 1998. It is still higher than that of any other occupational group but the differential has been eroded. Something similar has happened for the associate professional and technical group.
The fall in professional earnings is probably even sharper than the ASHE figures suggest. Much of the growth in self-employment since the recession has come from the managerial, professional and technical occupational groups. Given that self-employment incomes have crashed since 2008, it is reasonable to assume that if we could get an all worker earnings measure broken down by occupation it would show an even bigger drop in professional earnings.
This explains why, even though the growth in employment since the recession has mostly been in the higher skilled occupations, the median wage hasn’t gone up. The more people there are in these professional occupations, the less they seem to earn. A couple of years ago, Craig Holmes and Ken Mayhew noted a growing polarisation of wages in professional occupations and found that high status job titles don’t necessarily mean high status pay.
We find evidence that there has been a growth in lower paid jobs within a category of jobs generally considered to be well-paid.
A few people at the top are seeing their earnings pull away from everyone else, while those at the other end have seen their earnings slide. In other words, what is going on in the professional occupational group is a microcosm of what’s happening to pay as a whole.
A study for the FT by Brian Bell and Stephen Machin earlier this year found a gulf opening up in middle-class earnings both within and between professions. They identified a “pattern of gradual elimination from the top part of the earnings distribution” for some professions. For example “a teacher earned 24% more than the average in 1975, but only 6% more in 2013.”
Average (mean) wage in each occupation compared with average wage across all occupations
The ASHE figures show professional pay starting to fall in real terms in 2005. Data from the Top Incomes Database shows the income share of those between the 90th and 95th percentiles falling after 2005, continuing a 1990s trend which was briefly reversed in the early 2000s.
As the salaries of a few highly paid professionals surge ahead, the ‘just belows’ (HT Michael O’Connor) are finding themselves pushed out of the top income bracket and priced out of middle-class lifestyles.
There was a time when a degree would pretty much guarantee you a well-paying job. Not now though, say Bell and Machin.
These are all occupations that seem to be the type that policymakers have been encouraging workers to equip themselves to enter. And yet these professions increasingly deny access to the top earnings in the economy. Perhaps in the end what this tells us is that it is increasingly difficult to enter a profession and be sure that a comfortable and secure middle-class lifestyle will automatically follow.
There are many more graduates these days but most of them won’t earn the sort of money their parents made, even if they go into the same sort of job.
John Prescott is supposed to have said, “We are all middle-class now.” It’s true that a lot more of us are in the sort of jobs we once described as middle class. The trouble is, many of those jobs no longer pay that well. These days, having a posh job title is no guarantee of a posh pay packet.
Being middle-class just ain’t what it used to be.