Two nations

There's one aspect of yesterday's labour market data that hasn't had the attention it deserves - namely, the big long-run change in the occuaptional structure of the labour market.

The figures show that in the last 10 years, the number of "managers and senior officials" has grown by 18.7%, whilst total employment rose just 3.6%. Bosses now represent 16.1% of all jobs, compared to less than 13% when current records began in 2001.This trend doesn't seem to be slowing much: the number of bosses rose by 2.7% in the last 12 months, compared to a rise of 1.2% in overall employment.

The counterpart to this growth in the number of bosses has been a sharp drop in the number of workers in "administrative and secretarial" and "skilled trades" occupations; these have fallen by 14.8% and 13.7% respectively in the last 10 years. Employment in the least skilled occupations has also fallen, but less so, whilst the numbers of professional workers have risen. What we're seeing - in the US (pdf) as well as UK - is a form of job polarization. 

Now, it could be that this is a statistical artefact caused by a reclassification of some administrative staff - for example, when a secretary becomes an office manager. Consistent with this is the fact that the pay of managers (all of them together, not just CEOs) has lagged behind that of workers generally, rising by 27.7% in the last 10 years against 31.4% for all workers. But I'm not sure this is the whole story.

I have two observations and a question here.

First, the growth in the number of bosses has coincided with a slowdown in productivity growth. This is consistent with my prior that the managerialist ideology which demands ever more management is bad for efficiency. (It is, however, not proof; perhaps the productivity slowdown would have been even worse had it not been for the growing number of bosses - though I haven't seen anyone arguing this.)

Second, this occupational shift might be a justification for young people to go to university; a degree gives you a chance of entering one of the growing managerial and professional occupations, and of avoiding the shrinking ones.

My question is: what social and political effects might this long-run change have?

What I mean is that relations between a boss and his secretary or a skilled worker is often different from that between a boss and an unskilled worker. The latter is likely to be peremptory and dishonest on both sides, whereas the former is more likely to be candid and productive. What's more, whereas managers and skilled or administrative workers might meet socially, managers and less skilled workers are less likely to do so.

It's possible, then, that the disappearance of the "middling sorts" is generating a "two nations" society. On the one hand we have managers and professionals and on the other less skilled workers, and between them

there is no intercourse and no sympathy; who are as ignorant of each other’s habits, thoughts, and feelings, as if they were dwellers in different zones, or inhabitants of different planets; who are formed by a different breeding, are fed by a different food, are ordered by different manners, and are not governed by the same laws.

* Data are table EMP09 here.

Comments

[simon cooke]

Is it not that we are all becoming 'middling sorts'? When I worked in advertising we used to joke about job title inflation - the most junior of tea-makers and bag-carriers was an Account Executive and once the team leader became Account Director, his boss had to have a grander title - Senior Account Director or even Client Services Director.

At one point we proposed that the Board should retitle themselves using the names of Norse Gods - Odin, Thor, Freya, etc.

[Metatone]

One thing that distorts the figures might be the classification of the self-employed/SME startups?

Rick @ Flipchart might have some figures on this - but the number of self-employed and startups has gone up, as people try to scratch a living any way they can. They are classified as "bosses" - no good putting "monkey does everything" on your business card... but it's not the same as being a manager...

Anyway, Rick has plenty of figures showing that startups and self-employed doesn't do much for productivity.

[Metatone]

So stepping away from possible distortions, we know that most large businesses have been in two decades of de-layering. So that would logically cut away the middle.

Look at a big modern industry in Britain (soon to be failing due to the internet, but nevertheless) - retail. A host of poorly paid workers, usually one or foreman types in each shop (depending on shift) and then often now the "manager" covers 7-10 shops..

[Jim]

Increased regulation is the driver. All a manager had to do 100 years ago was achieve practical stuff. Build that bridge, unload that ship, get coal out of the ground, supervise men manufacturing stuff etc. Ensure that the raw materials arrived on time and were paid for, that the workers did their jobs as they were supposed to, and the finished product was of suitable quality and ended up with the customer as ordered. A manager was on the shop floor - overseeing the physical work and directing it.

Contrast that nowadays with how many bits of paper have to be correctly aligned before any actually physical activity can take place, and you'll see that the number of people required to do all this will rise in line with the requirements. Add this to the inflation of titles mentioned, and you end up with lots of 'managers' sat in offices shuffling paper none of whom add any practical assistance to the underlying task at hand.

[The Thought Gang]

if we didn't have so many managers then who would have the time to arrange and attend all the meetings? We need the meetings.. if we didn't have so many meetings then what would all the managers do with their time?

[chris]

@ Metatone - my figures refer to employees only, so they're not affected by the rise in self-employment. (Tho Rick is right that rising self-employment is one cause of slower productivity growth).
I'm not sure if these data support the delayering theory; they imply that one in 6.2 employees is a manager of some kind.
@ Simon - I suspect there has been job title inflation, but doubt this is the whole story; if it were, the relative pay of managers would surely have fallen by more than three percentage points over 10 years.

[InfoholicUK]

Well, it's at least partly explained by off-shoring isn't it ? Hands-on tasks get sent overseas, but the management overhead here goes up.

Agree with Jim about documentation too - massive increase over the last decade.

[FromArseToElbow]

As well as the factors already mentioned, an important contributor is the gradual disappearance of jobs - i.e. the declining demand for labour - of which increasing underemployment is a symptom. In a society where a job is partly a sincecure, i.e. a token for rent-extraction, the long-run trend towards automation will produce two effects.

First, automation will (initially) hit highly commoditised and regulated roles - i.e. routine unskilled and then routine skilled jobs. As automation itself needs to be managed, this leads to a faster decline in non-management jobs than management roles, hence the "worsening" ratio.

Second, the middle class is better able than the working class (through political muscle and networks) to offset the effects of automation through the creation of supernumerary roles. Some of this is necessary (you need project managers to automate or offshore labour), but some of it is "outdoor relief" (e.g. many roles in marketing, HR, finance and non-technical IT).

A final thought: The approx 1:6 ratio of managers and managed matches the ratio of officers and other ranks in the military, which suggests that the traditional "command and control" style of business management may also play a part in this.

[Philip Walker]

Another anecdote (so now we have data, right?) on job title inflation, or rather something related: as a junior academic (not, I know, the most populous profession), it is next to impossible to find the 'box' into which I fit on most surveys. I end up having to go for a managerial box, despite really being junior professional. Whether this affects the surveys on which these data are based I would not know, but it is a problem I could see applying to lots of professions' junior staff, such as accountancy and the law.

So it depends what categories are being used, and speaking from personal experience, I'm not confident that they are always the best ones.

[Doc at the Radar Station]

Maybe this is mostly due to simple demographics and "work culture inertia"? As the workplace grays the promotions and hence the managers tend to be the senior employees. Your graphs are starting to flatten out recently, that could correspond with the increasing retirements seen of boomers.

[Metatone]

@Chris, I think you'll find that the way the figures are sourced, they are affected by self-employement, because many self-employed now use limited companies...

[Staberinde]

It might also reflect the idea that certain lines of work have a pay ceiling which cannot meet the lifestyle aspirations which many people have.

For example, there's only so much people will pay for a domestic plumber. Perhaps in The Olden Days that amount was sufficient to support a wife and couple of kids in a terraced house on the cheap side of the tracks - but will it today? I'd not be surprised if the pressure was on our talented plumber to expand his business beyond sole trading (becoming a manager) or to join a bigger company and become a manager - simply because it pays better.

In short, I'm hypothesising that the increased relative costs of housing, transport, childcare, education and the like are drawing people out of skilled trades and into managerial roles. Today, for the plumber's daughter to go to university, the plumber must become a Water Solutions Executive.

[Zofel]

Is it possible that UK companies control more and more foreign offices and need managers to handle them?