Jobs divide between rich and poor has fallen by a third

The employment gap between people living in the poorest and richest families in Britain has fallen by a third since the late 1990s according to latest research by the Resolution Foundation.

The data also showed that workers in poorer households remain less likely to be satisfied with their job, and more likely to have insecure employment contracts,

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 in 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.”