About the rich owners

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Roula Khalaf, Editor of the FT, selects her favorite stories in this weekly newspaper.

Does it matter if your boss is rich?

This is a question I have rarely thought about over the years, especially when non-wealthy friends report unexpected misunderstandings with wealthy bosses.

There was an Australian woman whose distraught new boss was listening to her explain that she had to leave work at a fixed time each afternoon to pick up the children. home at school before asking him: “Why don’t you just get a babysitter?” He explained that unfortunately, that would be a tricky thing with the salary that his company was paying him.

A friend who was able to buy a place miles from office he surprised his wealthy boss, who lived near work, by revealing how much money he saved on train tickets by working from home during the pandemic.

Then there was the manager who invited his team to his sweltering house for a morning meeting and ushered them into what turned out to be neither the dining room, nor the kitchen, but “the breakfast”, a place meant for breakfast. larger than the apartments of many of his guests, none of whom had ever heard of such a room before.

I was reminded of all this when I came across recent international research that helps explain why these trends are happening – and why they are about to become more common. .

In developed countries across Europe, Asia and North America, the working class is becoming more and more affluent divided from the very poor.

Within industries and within individual companies, there has been “a sharp decline in the exposure of low-income earners to low-income earners”, say the authors. The Great Divide paper published late last year.

Consider France. In 1994, 1 percent of French workers worked in places where 9 percent of their colleagues were in the same high-income group. By 2019, that 9 percent had nearly doubled to 16 percent.

In the Netherlands in 2006, the top 10 percent of wage earners worked where about 25 percent of their colleagues had the same wages. By 2020 that number had risen to nearly 30 percent.

The larger the upper income group, the less likely they are to meet the highest paid workers.

There are many reasons why this is happening, starting with the decline in industrial activity. Factory life brings together blue collar workers as well as managers, engineers, managers and directors. It’s different within a bank, an insurance firm or a software developer.

Outsourcing jobs or tasks such as data entry or auditing to a clerical role deepens segregation, by removing a subset of low-wage workers from the office.

So is the rise of digitalisation, which is driving low-paying jobs away. This trend highlights the reason why the distribution of wealth that can be produced is widening.

The paper’s research began many years ago, says co-author Professor Halil Sabanci of the Frankfurt School of Finance & Management.

This was before ChatGPT and other forms of advanced artificial intelligence were introduced to the workplace. Sabanci thinks it’s reasonable to expect AI to accelerate the division of wealth that digitalization is already driving at work.

All this can have serious political consequences.

Sabanci and his colleagues suspect that the isolation of elites may help foster resentment among poor workers who read or hear about the lives of high earners, but they rarely see or meet them.

“This situation can increase feelings and experiences of being left out, ignored, and not understood,” they added, adding that this may help strengthen Trumpism and other forms of populism in Europe.

The electoral divide between affluent cities or coastal towns and struggling hinterlands has been a striking feature of recent election cycles, from the 2016 UK Brexit vote to the US presidential races and France.

In 1988, Jean-Marie Le Pen’s share of 15.6 percent of the vote in the Paris region was almost equal to the 14.4 percent he received elsewhere, write some of the authors of the paper. earlier research.

Three decades later, support for the daughter of the right-wing populist leader, Marine Le Pen, has dropped to 12.5 percent in Paris but has risen to 27 percent elsewhere – almost double number of his father’s votes.

Clearly, this change was not simply due to the increasing separation of high-income earners from other workers. But it is easy to see that this division would have encouraged change, and might have accelerated it.

pilita.clark@ft.com