PeopleImages.com - Yuri A/ShutterstockNike’s current CEO, Elliott Hill, began his career at the global footwear giant as an intern fresh out of university, steadily making his way up the ranks.
By Hill’s own telling, when he began as a sales intern in Tennessee in 1988, he packed boxes in the warehouse and answered office phones when needed. Ambitious and loyal, he climbed the corporate ladder, until in September 2024 he was coaxed out of retirement to be made president and CEO of the footwear maker.
This sort of career progression – from mailroom to boardroom, from factory floor to C-suite – sounds like the stuff of fiction, fantasy, or at least of the distant past. People today don’t stay at jobs for decades, as Hill did, as companies are often sold, restructured, split and reorganised instead.
Crucially, workplaces are also increasingly divided along income lines, potentially preventing a humble intern from ever interacting with high-level executives. This has damaging consequences for social mobility, cohesion and equality.
Workplace segregation
Although there is some debate about it in the US, economists generally agree that income inequality has risen in most advanced economies in recent decades; the top 1% is better off and the bottom portion of the population, worse. However, there’s another, often overlooked piece to the inequality puzzle: the growing separation of workplaces by income.
Our recently published research looks at workplace and salary data in 12 advanced economies over nearly three decades, beginning in 1990. The study covered businesses in countries such as Sweden and Denmark, some of the most egalitarian societies in the world, along with Canada, Japan and others.
Our research analysed more than 1 billion data points, mainly from official administrative records linking employers with employees (such as social security data with tax records). We then structured the data for homogeneous analysis across countries.
We didn’t look at whether the income gap is widening, as important as that is. Instead, we looked at high earners – the top 1% and the top 10% – and how much they are exposed to employees who make as much as they are. We also measured how much they worked with employees at the lower end of the salary scale.
With some variations, we found that top earners are increasingly surrounded by other top earners. On average, the percentage of employees in the same premium salary bracket as the top 1% increased at a yearly rate of 1.4% during the study period. That means that by the end of our study, one in eight coworkers was a stellar earner, up from one in 11 at the start. A similar trend was seen among the top 10% of earners.
These annual rates of increase in top earner segregation may seem modest, but they are comparable to the growth rate of the world population, or to the expansion of GDP per capita in Europe. While evolution from one year to the next may seem barely noticeable, over a 25-year period it results in a substantial societal shift.
It’s also not just that top earners are surrounded by other top earners. High-flyers in almost all countries are increasingly separate from employees at the bottom of the earnings scale.
We can look again at the top 1% of earners to see how many of their coworkers are in the bottom quarter of the income pile. That percentage fell by around 1.5% yearly, meaning that by the end of the study period, only 6.9% of top earners’ coworkers were from the lowest quarter of earners (down from 9.3%).
Distance between workers and managers
The earnings separation is particularly pronounced in the manufacturing and finance sectors, which points to three of the root causes of the growing distance: workplace restructuring, deindustrialisation and digitalisation.
With a common emphasis on leanness, workplaces in recent decades have downsized and restructured through processes such as outsourcing and subcontracting. This tends to create a particular kind of structure: a small, highly skilled headquarters, with other services and operations taking place elsewhere.
In global industries, this can mean low-skill, routine jobs are relocated to low-wage countries, while positions like managers and engineers remain in the headquarters. Corporations have, in effect, replaced the hiring of workers with the buying of intermediary goods and services.
Deindustrialisation in advanced economies has also played its part. Manufacturing traditionally featured more interaction among different employees, for instance in factories where the boss and workers had regular contact.
Service companies have also become both more specialised and more polarised – both the exclusive expertise of financiers and the manual skills of cleaners cannot be industrialised. In general, we found that finance stands out for its disproportionately large contribution to inequality, during boom as well as bust years.
A third factor is the digitalisation of labour processes, which tends to eliminate low-skilled, routine work and create more homogeneous firms. Many mid-paid jobs – data entry positions, junior designers, translators and so on – get squeezed out, but polarisation rears its head again, since non-routine jobs at either end of the spectrum, such as CEOs and care workers, may withstand digitalisation. However, the people at these two extremes may not ever interact with each other.
Worse opportunities
We tend to think about social cohesion and mobility in terms of our civic institutions, neighbourhoods and schools. However, adults actually spend more time at work, interacting with their coworkers, than at home interacting with their neighbours.
Workplaces not only allow for the redistribution of social and human capital from top to bottom and for the integration of diverse employees, but they also foster relationships. When low earners no longer work in the same building, facility, or even company as top earners, they will have little chance of being promoted internally.
In segregated workplaces, low earners also lack access to the information and influence that higher earners enjoy. As a result, they have worse prospects for upward mobility.
Companies, of course, are not the only source of inequality. Wealth inequality – with factors such as intergenerational wealth and savings – remains high. Inequality of opportunity, whereby future-lifting options like education are abundantly available to some and completely out of reach for others, is difficult to measure and even more difficult to correct.
But organisational inequality is an important part of the puzzle. It seems highly unlikely that Elliott Hill, if he secured the same internship in Nike today, could realistically aspire to one day be its CEO.
Marta M. Elvira has received funding from the Spanish Ministry of Science and Innovation (grant nr. PID2020-
118807RB-I00/AEI /10.13039/501100011033)Godechot Olivier has received funding from ANR, MaxPo, AxPo, Sciences Po to conduct this research.