The thing about rich bosses

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Does it matter if your boss is rich?

It’s a question I’ve given little thought to over the years, mostly when non-wealthy friends report unexpected misunderstandings with wealthy bosses.

There was an Australian woman whose apparently surprised new manager overheard her having to leave work at a certain time every afternoon to pick up her kids from school before asking: “Why don’t you get a nanny?” He explained that alas, it would be difficult with the salary his firm was paying him.

Another friend who can only afford miles from a property the office Her wealthy boss, who lived close to work, surprised her by revealing how much money she had saved on train tickets by working from home during the pandemic.

Then there was an executive who invited his team to his sprawling home for a morning meeting and ushered them into what was neither the dining room nor the kitchen, but the “breakfast room,” a space devoted entirely to breakfast. Larger than the apartments of most of his guests, none of whom had ever heard of such a room before.

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

In developed countries across Europe, Asia and North America, wealthier workers are becoming more and more isolated from the less affluent.

Within industries and within individual companies, “the top earners have declined dramatically to the bottom earners,” the authors say The Great Separation paper Released late last year.

Take 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 their peers earned roughly the same income as 25 percent. By 2020 this percentage has risen to around 30 percent.

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

There are many reasons for this, starting from the decline in employment in the industry. Factory life combines blue-collar workers with supervisors, engineers, managers and executives. It differs between 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 a segment of low-income workers from the office.

So is the rise of digitization, which automatically drives away low-paying jobs. This trend points to one reason why wealth fragmentation may be increasing.

Co-author Professor Halil Sabansi of the Frankfurt School of Finance and Management said research for the paper began many years ago.

This was before ChatGPT and other forms of advanced artificial intelligence were released into the workplace. Sabansi thinks that it is understandable to expect that AI will accelerate the division of resources that digitization has already driven in the workplace.

All this could have profound political consequences.

Sabansi and his colleagues suspect that elite isolation in the workplace has helped create resentment among already poor workers who read or hear about the lives of top earners, but rarely see or meet them.

“This situation can increase feelings and experiences of being left behind, ignored and misunderstood,” they write, adding that it could help fuel Trumpism and other forms of populism in Europe.

Voter polarization between wealthy capitals or coastal cities and struggling hinterlands has certainly been a striking feature in a series of recent elections, from the 2016 UK Brexit vote to presidential battles in the US and France.

In 1988, Jean-Marie Le Pen’s 15.6 percent vote share in the Paris region was about the same as the 14.4 percent she got elsewhere, some of the paper’s authors wrote. Previous research.

Thirty years later, support for Marine Le Pen, the daughter of the right-wing populist leader, has fallen to 12.5 percent in Paris but has risen to 27 percent elsewhere – almost double her father’s vote.

This change is certainly not due to the widespread isolation of top earners from the rest of the workforce. But it is easy to see that this isolation can fuel change and accelerate it.

pilita.clark@ft.com