When do rich people feel rich? Not when earning “only” £140,000 a year, apparently.
A new study by London School of Economics researchers on the top 1% of UK earners has found a big wealth gap between high earners and the truly super-rich – the top 0.1%.
The report details the resentment and outright envy felt by many high earners acutely aware of a gulf separating them from multi-millionaires. One investment banker complained that earning a few hundred thousand a year “just doesn’t feel particularly wealthy” when others in the City have millions of pounds in bonuses and assets.
And if you feel like playing the world’s tiniest violin, LSE researcher Dr Katharina Hecht said the divide is actually more than perceptual. She states that there is “vast absolute income inequality” within the 1%.
Earning more than £140,000 before tax would put you in the UK’s top 1%. But the top 0.1% are earning an average income of £990,000.
They are surrounded by vast absolute income inequality
The difference is not something many of us would understand or perceive when, say, walking the streets of south Kensington. But it is felt.
“While recognising their advantage compared to the general population, they experience disadvantage when “looking up”,” said Dr Hecht.
“(They) are surrounded by vast absolute income inequality, because the differences between top income earners are much higher than those between individuals situated in the middle of the distribution.”
If you were beginning to empathize, ever-so-slightly, with the forgotten 0.9%, it’s worth reading the thoughts of some of the LSE’s interviewees.
Three people on The Sunday Times Rich List were among the 30 people questioned for the study. And one hedge fund manager compared the power of his labour to former England captain Wayne Rooney.
“If you’re someone like Wayne Rooney, you can go to Manchester United and say “pay me £200,000 a week or I’m gonna go to somewhere else” and Man Utd just say “yeah fine” because he’s got unique pricing power,” he said.
“If you are a successful hedge fund manager, if you make money for your clients, you also have unique pricing power because of the fees that we receive.”
If “looking up” detains the thoughts of the country’s high-earners, poverty and wider social inequality does not seem to trouble most of them.
Around two-thirds of people surveyed by LSE disagreed with the statement that “the government should reduce income differences.”
Last year, 27,000 people worldwide earned an income selling street papers, making a total of £23.4 million.