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

Does it matter if your boss is rich?

It’s a question I’ve thought about occasionally over the years, usually when non-wealthy friends report unexpected misunderstandings with wealthy bosses.

There was an Australian woman whose new manager clearly bewildered listened to her explain that she had to leave work at a fixed time every afternoon to pick up her children from school before asking her: ” Why don’t you just get a nanny?” He explained that unfortunately, the salary his company paid him was difficult.

Another friend who can only afford a property miles from office shocked his wealthier boss, who lives close to work, by revealing how much money he saved on train tickets by working from home during the pandemic.

Then there’s the executive who invites his team to his spacious home for a morning meeting and ushers them into what turns out to be neither the dining room, nor the kitchen, but the “breakfast room”, an area entirely devoted to at breakfast. bigger than the apartments of most of his guests, no one had heard of that room before.

I was reminded of all this when I came across some recent international research that helps explain why these instances happen – and why they may be becoming more common.

In developed countries across Europe, Asia and North America, wealthy workers are on the rise separately from the less wealthy.

Within industries and within individual firms, there is a “significant reduction in the exposure of the highest income to the lowest income”, say the authors of The Great Separation ROLE was published late last year.

Consider France. In 1994, the top 1 percent of French earners worked in places where 9 percent of their peers were in the same top income group. By 2019, that 9 percent share had nearly doubled to 16 percent.

In the Netherlands in 2006, the top 10 percent of earners worked where about 25 percent of their co-workers had a similar income. By 2020 that percentage has risen to nearly 30 percent.

The larger the top earners, the less likely they are to mix with the lowest paid workers.

There are many reasons why this is happening, starting with the decline of industrial jobs. Factory life brings blue collar workers together with supervisors, engineers, managers and executives. It is different within a bank, an insurance company or a software developer.

Outsourcing or offshoring jobs such as data-entry or payroll clerk roles deepens the divide, by removing chunks of low-income workers from the office.

So is the rise of digitalization, which is automating low-wage jobs. This trend highlights one reason why wealth inequality may be set to grow.

Research for the paper began several 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 released into the workplace. Sabanci thinks it’s reasonable to expect AI to accelerate the diversification of wealth already enabled by the digitization of work.

All of this could have major political ramifications.

Sabanci and his colleagues suspect that the elite’s isolation from the workplace may have helped fuel resentment among poor workers who read or hear about the lives of the top earners, but rarely see or meet them.

“This situation can increase feelings and experiences of being left out, ignored, and misunderstood,” they write, adding that this in turn helps fuel Trumpism and other forms of populism in Europe.

The polarization of voters between wealthy capitals or coastal cities and struggling hinterlands has certainly been a striking feature of successive elections, from the 2016 UK Brexit vote to the presidential battle in the US and France.

In 1988, Jean-Marie Le Pen’s 15.6 percent vote share in the Paris region was almost the same as the 14.4 percent he got elsewhere, write some of the paper’s authors in early research.

Thirty years on, support for the right-wing populist leader’s daughter, Marine Le Pen, has dropped to 12.5 percent in Paris but has risen to 27 percent elsewhere — nearly double her father’s vote share.

This change is of course not due only to the widening separation of top earners from other workers. But it is easy to see that this differentiation can stimulate the transition, and it may be about to accelerate it.

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