Why are managers earning ever more and cleaners earning ever less?

Thijs Bol receives Veni grant for research into differences in remuneration between professions.

13 August 2015

In recent years, income inequality has grown in many Western countries. In the United States, the wage gap is mainly caused by the growth in pay differentials between professions. Sociologist Thijs Bol has received a Veni grant to research to what degree this is also the case in Europe, and why.

The fact that a wage gap exists is not surprising in itself, says Bol. 'It won't come as any surprise that a doctor earns more than a cleaner. A doctor performs complex tasks that only a small proportion of people can do. The work of a cleaner is less complicated, which means that many more people can practice that profession. That helps explain the difference in earnings. My research is about why the gap between employees earning a lot and those earning little has grown in recent years.'

Middle class jobs disappearing

One of the possible explanations for this phenomenon, according to American research, is the increased absence of trade unions, which means that the wages of employees in 'lower' professions are no longer protected. The composition of professions is also changing: more and more people are employed in the higher and lower segments of the job market, and many middle class jobs have disappeared. One of the most important trends, however, is the increasing difference between professions: doctors and managers are making more and more, while the salary of cleaners, for instance, has remained the same or even decreased.

Barriers complicating entry into a profession

Thijs Bol's research focuses on this trend in Europe. Is the same trend evident in the Netherlands, Germany, England, France and Norway, and if so, why? 'Have the tasks of doctors and managers become more complex, for example? It could also be the case that certain professions have created barriers to complicate entry. Regulated professions, for instance. You can't simply decide to become a doctor or a lawyer, so there are fewer people with these jobs, enabling them to charge more money for their services. Entry into certain professions can also be restricted by qualifications. In Germany, for example, you can only call yourself a buttress worker after obtaining a set of very specific certificates. In England, there is no such certificate, and one is trained as a carpenter. Naturally, England also has buttress workers, but – unlike in Germany – the profession is not restricted to those with the right certificate.

Managers playing salary leap-frog

The minimum wage and collective labour agreements obviously play an important part in the extent of the wage gap. 'In countries like the Netherlands and Norway, which have more social security benefits than for instance England, the wage gap is smaller.' All kinds of other mechanisms can play a role too. 'Take the phenomenon of leapfrogging. A manager who makes 2 million discovers that someone on the board makes 2.1 million, and "therefore" wants to make more than that person. The other manager then tries to top that figure, etcetera. Because there's no ceiling, salaries rise without any increase in the complexity of tasks. This happens at the absolute top level of management, but presumably also in lower levels of management. These are the mechanisms on which I would like to focus my research.'

Excessive inequality endangers stability

According to Bol, his study will yield valuable data for government. 'Inequality exists and you won't hear me say that that's wrong. Differences make people strive to do their best. But those differences shouldn't become too large, lest they become counter-productive. The Organisation for Economic Cooperation and Development (OECD) has warned that excessive wage differences cause diminished trust in the government and democracy, which can endanger the stability of a country. Additionally, economic growth is stunted when the wage gap is too large. Whatever your view on this subject, it's important for a country and its economy to keep the wage gap within reasonable limits. In order to do that, however, it's necessary to know what's at the root of those differences. I hope to contribute to this body of knowledge with my research.' 

Bol's study will begin in September and last four years.

Published by  Faculty of Social and Behavioural Sciences