Here, courtesy of the Centre for Economic Performance, is how the share of income going to the richest 1% has changed since the start of the last century:
It is notable that although 1979 clearly stands out as a turning point, 1997 does not. The trend just continues as before.
They also point out that it is not just Chief Executive and similar posts which have seen sharp pay increases:
Although Chief Executive pay gets much of the media attention, they point out that it is far from the whole story when it comes to looking at how the best paid have fared compared to everyone else. Their more detailed research findings as far as CEOs go presents a more nuanced picture than most: CEO pay falls when company performance falls they find, and rises when it rises. Although rises tend to be more generous than the cuts are severe, the difference is not the great – and sackings of CEOs increase when performance falls.
What they do stress is the role of the finance sector in increasing the share of income to the richest: “Top 1% got an extra 1.6% of the income pie: but this was almost all finance workers”. A similar pattern emerges across the top 10% – it is predominantly the finance sector which has been causing the increasing share of the income pie going to the top 10% and in that sector it is not simply CEOs that have been the cause but also the best paid traders.
As far as the politics of all this goes, MORI’s data from 2008 is central: “The higher your personal income, the more likely you are to under-estimate how well off you are compared to other people in Britain”.
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8 Comments
It’s interesting that the all that’s fair and equitable Guardian is paying so much to it’s Editor, especially considering it’s financial troubles.
I can see that the First World war could have triggered a decline in the % of income to the richest due to wages rising for the working classes due to a lack of supply in the Labour market, but I’d also be interested to know whether this graph based on household or individual Income, and whether it’s before of after tax?
The timing of women entering the workplace may be crucial to understanding this trend. This graph may show household income for the richest declining as increasing numbers of poorer women enter the workplace, until such a time as the wives of the richest 1% decided to stay in their careers and suddenly the richest households have two very well paying jobs instead of one.
Charles: it’s not just the quantum, but the increase. The editor of the Guardian has had a bigger pay rise than the average FTSE350 CEO! I would almost be shocked, except that rank hypocrisy is what I’ve come to expect from the Guardian.
So, the share taken by the wealthiest has increased virtually in a straight line every year since Mrs Thatcher came to power (and a little bit before). Political dynamite, exposing Labour for what they were/are but only if we in the Coalition do something to halt the trend. Any bets on this?
No bets since a lot (most?) of the Tories in the goverenment almost certainly think it’s all a very good thing.
Very useful graph though.
Tony Greaves
That’s a really useful analysis, Mark. What would be fascinating would be a comparison with a few other countries – say, the US, France, Germany, The Netherlands, Australia.
The “Blair” data on this graph stop at 2000, so they mainly cover the period when they were still working off the back of Ken Clarke’s fag packet. However, the next graph on the referenced presentation show how that changed after 2000 with the rise of the City bonus – even more rising inequality, with the top 1% earning over 20%.
1945, 1964 and 1974 all seem to correlate fairly well with the beginning of a period of slightly reducing inequality, back in those bad old days when socialism meant something….
Back in those bad old days, however, any fule kno that trying to soak the rich more heavily was largely futile, because they just weren’t earning enough in aggregate to make a big difference. It’s not true any more. Gordon knew that, when he happily let the City bonus culture run riot and then skimmed off the cream in tax receipts. Gideon knows it too, but would prefer to suppress the idea and keep his donors on side.
There is an alternative…
Interesting title, Mark: “How much do the richest 1% in the UK receive?” (emphasis added).
I think “earn” or “create” might be more appropriate. Money isn’t doled out by the collective, you know.
‘Earn’ isn’t a phrase without problems, viz ‘unearned income’ as an example Tom, which of course is a phrase with a long liberal heritage.