Inside Story

Fear of falling

Why would high earners have a mistaken view of where they sit on the income ladder?

Peter Browne Books 20 December 2023 1008 words


Sometime late last century I spent a couple of weeks filling in as a producer on one of ABC radio’s afternoon programs in Melbourne. Each day we’d comb through the morning’s papers looking for interview ideas that might have escaped the four programs before ours in the day’s schedule. My secret was to scan the Financial Review rather than the already-pillaged Age and Herald Sun.

During those two weeks the Financial Review began a series on “the new middle class.” It opened with a long article analysing survey results that revealed how households on $140,000 a year — a lot of money in those days — didn’t consider themselves particularly well-off. Great, I thought — this’ll make for a solid ten or fifteen minutes. I hurried over to the presenter of the program and showed him the article. “Good God,” he exclaimed after reading the opening paragraphs. “How do people manage on that kind of money?”

Sociologists Marcos González Hernando and Gerry Mitchell open their new book, Uncomfortably Off, with an incident that makes a similar point in a slightly different way. In an episode of the BBC’s Question Time during the 2019 British election campaign, IT consultant Rob Barber accused a Labour MP of lying when he said the party’s plan to lift taxes on high earners would only affect people on the highest incomes. Labour wouldn’t be lifting taxes for the remaining 95 per cent, the MP promised.

“But you are!” Barber replied angrily. “Because I’ve read your policy!” The tax would apply to incomes above £80,000, and that meant he’d be among those who’d pay it. “I’m nowhere near the top 5 per cent, let me tell you. I’m not even in the top 50 per cent.”

Barber was wrong: a salary of £80,000-plus put him comfortably in the top 5 per cent of earners. (At around the same time, an Australian earning $180,000 would have snuck into the same bracket here.) His likely mistake, according to Hernando and Mitchell, was to habitually compare himself with people who earn as much as he does or, more importantly, those who earn much more.

As its title suggests, Uncomfortably Off attempts to explain why people on relatively high incomes don’t feel particularly affluent. (Hernando and Mitchell’s interviewees, all British, were drawn from the top 10 per cent of earners, though not the top 1 per cent.) Partly it’s because, like Barber, they compare themselves with people who earn more than they do. Partly it’s because their spending has increased as their incomes have risen and they have to find the money to cover increases in school fees, rising private healthcare costs and mounting lifestyle expectations.

These pressures contribute to what the authors call a fear of falling — the fear that they or their children will end up further down the income ladder. And those pressures have only worsened in recent years. The Conservative government’s austerity program of 2010–19 encouraged wealthier households to abandon overstretched public schools, healthcare and other publicly provided services, adding to the pressure on household finances, and the growing crisis in British schools, hospitals and community care has only added to the incentive to bail out.

But why would well-heeled earners look up rather than down when they’re assessing their own position? Increasingly segregated schooling and housing, more marriage within rather than between income groups, much less shared experience of healthcare and other social services, a greater focus on paid work and its monetary rewards — these are a large part of the explanation, say Hernando and Mitchell.

“All these tendencies,” they write, “mean that it’s increasingly rare for high earners to get to know people outside their usual interaction with friends, family, work and education, especially when other networks (such as those based on religion or hobbies) either dwindle or move online.” Asked to place themselves in the income hierarchy and feeling under pressure, they compare themselves with the relatively small segment of the population that seems typical to them.

This wouldn’t be quite such a problem if it weren’t for the fact that wealthy people have disproportionate political power. Once they withdraw from the spheres that most people inhabit — government-provided schools, healthcare or childcare, for instance — it’s no longer in their interest for those services to be adequately funded. This sets up a malign cycle: underfunded public services push people who can afford it into the hands of private providers. Their services cost more — often much more — and that puts pressure on their own finances, increasing their resistance to taxes and making them more likely to support government cutbacks.

Some of these trends are hard to reverse. We can’t do much about people marrying within their own milieu, for example. But we can begin the slow process of changing that milieu. The obvious place to start is in the school system, where private schools (generally the preserve of the wealthiest families) are reinforcing social segregation to an alarming degree.

Hernando and Mitchell conclude that cracks are opening up in the fearful barriers wealthy Britons have erected against an increasingly underresourced public sphere. “This book’s aim is to invite the top 10 per cent to consider a future in which, for the price of giving up the barriers through which they seek to distinguish themselves from the rest” — a price that would include higher taxes — “they could become less anxious, more secure and less isolated.”

Can Australia learn from Britain’s uncomfortable wealthy? While 7 per cent of British children are educated in private schools, the Australian figure is 35 per cent. Add in selective government schools, particularly in New South Wales, and our school system rates among the most segregated in the Western world. But the groundswell of support for the Gonski report (before it was fatally compromised by federal and state governments of both varieties) shows the soil is fertile. •

Uncomfortably Off: Why the Top 10% of Earners Should Care about Inequality
By Marcos González Hernando and Gerry Mitchell | Policy Press | £19.99 | 256 pages