Britain's Jobs Divide Between Rich And Poor Has Fallen By A Third, But ‘quality Of Work' Gap Hasn't

12th December 2024

The employment gap between people living in the poorest and richest families in Britain has fallen by a third since the late 1990s. But workers in poorer households remain less likely to be satisfied with their job, and more likely to have an insecure employment contract, according to new research published today (Thursday 12 December 2024) by the Resolution Foundation.

A Hard Day's Night - the second report of the Foundation's Unsung Britain project, with support from JPMorganChase - finds that lower-income families often work in different parts of the labour market to those in higher income families. They are almost twice as likely to work in retail - the most popular sector for lower income Britain - as those in higher income families (11 per cent vs 6 per cent), and are significantly less likely to work in the public sector (19 per cent vs 26 per cent).

People in low-to-middle income families have made dramatic progress in moving into work in recent decades. The employment rate for a 20-64 year old in a lower income household has increased from 54 per cent 1996-97 to 64 per cent in 2022-23.

With the employment rate for those in higher income households rising from 90 to 92 per cent over the same period, the employment gap between the richest and poorest families in Britain (those at the 80th and 20th income percentile) has fallen by a third.

This progress is even more striking, say the authors, given the rising share of disadvantaged groups among lower-income Britain, which - had their employment rates not changed - would have reduced employment across lower income Britain.

Instead, over this period we have seen huge employment rises among lone parents and people with disabilities from low-to-middle income families (up 17 and 13 percentage points respectively).

However, less progress has been made in terms of improving working conditions for people in low-to-middle income households.

They are less likely to work in ‘secure' jobs than workers in higher income families, as they are more likely to be employed on a zero-hours contract, to work in the gig economy, to be solo self-employed or to have a temporary contract. In total, 2.5 million people in lower-income Britain are employed in these ways.

This relative lack of job security helps to explain why workers in low-income families consistently report lower levels of job satisfaction than those in high-income families (77 per cent vs 82 per cent for those in the bottom and top income quintiles respectively), say the authors.

In fact, 86 per cent of people in low-income families said that ‘security' was a very important or essential aspect of work, making it the second most important aspect of work (after ‘like doing the job').

‘Security' is a less of a priority among high-income families, with ‘like doing the job’, ‘relations with boss’, ‘ability to use abilities’ and ‘ability to use initiative’ all ranked higher in terms of being very important or essential aspects of work.

Other concerns cited by workers from low-to-middle income families in focus groups conducted by the Foundation included unexpected overtime, stress at work, and bad managers.

The Foundation says that while many of the ‘quality of work’ issues raised by employees – such as treating staff with more respect and improving management quality – need to be resolved directly with employers, policy makers do have a role to play in boosting job security.

Provisions included in the Employment Rights Bill – including protection against unfair dismissal and the new right to guaranteed hours – should help workers in lower-income families and the evidence suggests that workers are likely to value this extra security.

Nye Cominetti, Principal Economist at the Resolution Foundation, said:

"Britain has long had a huge jobs divide between rich and poor families. But that divide has fallen by a third in recent decades, thanks to huge employment gains among disadvantaged groups such as lone parents and people with disabilities.

"But Britain still has a ‘quality of work’ gap. Workers from lower income families are less likely than those from richer households to have a secure job or be satisfied at work.

"With over four-in-five workers from lower income families saying that security is a vital aspect of their work, the Government is right to focus on improving working conditions through its Employment Rights Bill in the face of opposition from business."

Key findings
Increasing employment has been one of the major economic shifts of the past quarter century, and workless households – households without any members in work – have become correspondingly rare: they account for 14 per cent of working-age households now, versus 21 per cent in 1996 – a fall of one-third. The vast majority of this shift has taken place within low-to-middle income families. Among higher-income families, employment has inched up: the employment rate among 20-64-year-olds in higher-income families was 90 per cent in 1996-97 and 92 per cent in 2022-23. But among low-to-middle income families the change has been dramatic: the 20-64-year-old employment rate rose from 54 per cent in 1996-97 to 64 per cent in 2022-23.

This is not because of changes in who low-to-middle income families are, but instead because employment rates have risen across the board within low-to-middle income Britain. Since 2002-03, among people on low-to-middle incomes, the employment rate has risen 17 percentage points among single parents, and 13 percentage points among people with disabilities.

In 2022-23, median hourly pay among low-to-middle income employees was £11.20, compared to £17.65 among workers in higher-income households. Low-to-middle income workers are also more likely to be paid the minimum wage: between 2019-20 and 2022-23, nearly one-in-five (18 per cent) of low-to-middle income workers were paid close to the minimum wage, compared to just 5 per cent of higher-income workers.

Lower-income workers are slightly more likely than those from higher-income families to work in ‘insecure’ jobs. Across the years 2017-2021, among workers in low-to-middle income families, 2.0 per cent of workers reported being on zero-hours contracts (versus 1.6 per cent in higher-income households), 12.8 per cent were ‘solo’ self-employed (compared to 8.7 per cent of higher-income workers), and 10.9 per cent were on temporary contracts (versus 9.2 per cent of higher-income workers). Additionally, in 2021-2022, 1.7 per cent of low-to-middle income workers were doing ‘gig’ work as a driver or courier, compared to 1.3 per cent of higher-income workers.

Despite differences in the sorts of jobs that low- and higher-income workers do, they want broadly the same things from work. When asked about the aspects of work that are important to them, an overwhelming majority of low-to-middle income and higher-income workers emphasise liking the work they do, having job security, and having good relationships with colleagues and bosses. Notably, for both low-to-middle income and higher-income workers, ‘good pay’ ranks well below these job considerations.

The vast majority of workers are satisfied with their job, and this has increased very slightly over the past decade. In 2010-2011, 78 per cent of workers were satisfied with their job, rising to 80 per cent in 2022-2023. There is a small but persistent satisfaction gap between low-to-middle and higher-income workers, with the former consistently 2-3 percentage points less likely to express satisfaction with their job than the latter. The gap is larger between workers on the very lowest and highest incomes: in 2022-23, around three-quarters (77 per cent) of workers in the bottom income quintile reported being satisfied with their job, compared to 84 per cent of those in the top quintile.

Many workers from low-to-middle income families are wary of changing jobs or progressing in work. One reason for this is the financial barriers to progression, with those in receipt of means-tested benefits facing high marginal effective tax rates (METRs) as benefits are withdrawn when earnings rise. Strikingly, low-to-middle income couples with children face METRs of 42 per cent, and these rise to 56 per cent for low-to-middle income single parents.

Read he full report HERE
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