Higher earners see economic change as risky, while low-earners see little to gain from change
Higher earners are more fearful of moving or losing jobs than low-earners, due to worries about getting less pay and flexibility when they find new jobs, while low-earners often see little benefit from upending the status quo, according to new research published today (Wednesday) by the Resolution Foundation.
Listen Up – the 18th report for The Economy 2030 Inquiry, a collaboration with the LSE, funded by Nuffield Foundation – examines people’s experiences of the economy as workers, consumers and social citizens via a series of focus groups across the UK.
Participants made clear that – contrary to the popular narrative about the growth of ‘bullsh*t jobs’ – their work often had purpose and meaning, and that it added value to both their local community and the wider economy.
High work intensity and bad management were identified as the main negatives at work. This resonates with recent Resolution Foundation research, which identified rising work intensity as a key factor behind falling job satisfaction among low earners (which has fallen by around 20 per cent since the early 1990s) and poor management practises as a key factor behind low productivity.
When considering their experience of economic change, big differences emerged between low- and higher earners.
Higher earners saw change in the labour market as risky – identifying the challenges of finding equally well-paid work, and losing the flexibility ‘earned’ from their current employers. They were also fearful of unemployment, reflecting a (correct) belief that they would receive little insurance from the state during any period out of work.
Low-earners were less worried about the prospect of losing their job – seeing their skills as transferrable, and feeling that it was easy to find new work. This view likely reflects the fact that the current labour market is tight, with vacancies currently at record highs, says the Foundation.
However, they reported little incentive to actively find new work given they expected it to be more-of-the-same in terms of levels of pay, work intensity and insecurity. The financial gains from moving jobs were seen as too small, and the financial cost of undertaking training to enable them to find better-paid work was too high.
The Foundation notes that this shared reluctance to move jobs is hugely problematic. For higher earners, a lack of job mobility can stunt their careers (particularly if they’re young), while low-earners could find themselves trapped in an unsatisfying low pay, high insecurity working environment, while still feeling little incentive to escape it.
Turning to consumption, there was widespread worry about the cost of living crisis, and price was by far the most important consideration for individuals. Participants wanted to shop local to support the local economy, but acknowledged the tension with shopping online, and said that the latter would ultimately prevail due to costs.
People were also open to the idea of paying more if it meant sustainable products or better pay for workers, but did not want to take responsibility for making often complex ethical consumption choices.
This highlights the importance of regulation – from a higher minimum wage and better employment rights, to product standards on sustainability – as a means to help consumers effect positive change through what they buy, says the Foundation.
Finally, participants said that when money was tight – as it will be for many more families this year – life choices were limited. People turned first to friends and family in tough times, and took a broader view of what the social safety net should provide – not just benefits but public services like mental health support too.
Ultimately, the key means for people to have both greater choice in what (and where) they spend, and greater financial security, is stronger pay growth and adequate income insurance. Helping to support that is a key task for policy, says the Foundation.
Karl Handscomb, Senior Economist at the Resolution Foundation, said:
“The big takeaway from our research is that people value work in far richer ways than simply their pay cheque. They are also resistant to change, with high-earners finding too much to lose from moving jobs, and low-earners finding too little to gain. This lack of job mobility represents a huge challenge to overcome for both individuals and the wider economy if we’re to improve pay, productivity and wider economic growth.
“Choice was acknowledged as important to get better value for money, and to actively participate in wider society. But people warned that when money was tight, their life choices were limited. This suggests the cost of living crisis could have a wider impact on families than just their personal finances.”
Alex Beer, Welfare Programme Head at the Nuffield Foundation, said:
“This report gives much-needed voice to people who are not often heard in economic debate. It highlights how people’s lives are about so much more than work and spending, including the importance of family and community, and the contributions that so many make to society.
“However, bad management, limited autonomy at work and rising costs are all detrimental to people’s quality of life and have implications for the successful functioning of the UK economy. Better management practices, training opportunities, an improved social security safety net and regulation in product and labour markets could all make a difference.”
