Thursday, February 23, 2017

How Social Class Can Affect Your Pay

How social class can affect your pay Professionals from elite backgrounds earn more than peers from working-class families Read next FT View An equitable future can be built in Silicon Valley Claudine Adeyemi: the lawyer fears her background may hold her back © Anna Gordon/FT Share on Twitter (opens new window) Share on Facebook (opens new window) Share on LinkedIn (opens new window) Email89 Save YESTERDAY by: Naomi Rovnick Like many people at her City of London law firm, Claudine Adeyemi was a teenager when she decided to become a lawyer. But unlike her peers, she was homeless when she sat her A-levels at a state school, living in temporary bed and breakfast accommodation a result of her mother’s death and falling out with her father. As an undergraduate, she commuted to her lectures at University College London from the south London council flat she had moved into at 18. Now in her late 20s, Ms Adeyemi, who has kept her south London accent, is determined to progress inher career but believes the top position — partner — could be out of reach. While confident of her legal skills and ability, she believes she lacks polish and networking acumen. Ms Adeyemi fears her privately educated peers will beat her in the race to the top. Research says her hunch may be proved right. A new paper, by Professor Daniel Laurison of Swarthmore College in Pennsylvania and Professor Sam Friedman of the London School of Economics, has identified a “class ceiling”. The researchers found highly qualified employees in the City of London and elite professions were paid less according to their social background. While some employers have made an effort to recruit from a broader range of social backgrounds, little attention has been paid to what happens to these people as their careers progress. How one employer is trying to crack the class ceiling Grant Thornton, the professional services firm, is examining its practices on class and pay in the UK. Its 4,500 British employees fill in a form every year to update their personal information. Last year and for the first time, the firm included questions about employees’ social backgrounds — such as whether they were the first in their families to attend university, or whether they qualified for free school meals as children. Sacha Romanovitch, chief executive, says the objective was to “analyse firm-wide progression and pay in relation to socio-economic background, as well as gender and ethnicity”. more They feel less entitled to ask for pay rises or “even exclude themselves from seeking promotion because of anxieties about fitting in”, the report says. Ms Adeyemi recognises the description. “A lot of people I went to university with were of completely different backgrounds to me. I did not make many friends [because] I did not fit in very well.” Many of her lawyer colleagues, she adds, made friends at university who will become clients later on. “I don’t have that.” The study’s authors found that the more upwardly mobile professionals were, the more discrimination they encountered. British professionals working in law, accountancy and finance whose parents did manual jobs or were unemployed earned 20 per cent less on average than colleagues from upper middle-class backgrounds, according to the study. The research identified “substantial disadvantages” in pay for employees of working-class origin in academia, the UK civil service and medicine. Add gender to the mix and the bias increases. Women who have made the largest leap from their parents’ occupation — for example, a long-term unemployed father — might earn 25 per cent less than “otherwise similar” men whose parents had high-status jobs. The “upwardly mobile”, as the study terms people who have travelled into a higher socio-economic group than they inhabited as children, “may be consciously or unconsciously given fewer rewards in the workplace than people from more advantaged backgrounds”. “This may manifest as outright discrimination or snobbery . . . or it may have to do with more tacit processes of homophily in contexts such as interviews or performance appraisals.” That study focuses on the UK, but complements 2015 research in the US that found the amount of money an employee makes can be roughly predicted by the wages his or her parents earned. The study by Stanford University’s Center on Poverty and Inequality found that children born to the top 10 per cent of earners are typically on track to make three times as much as the children of tenth-decile earners, although it does not measure occupation. Business School Sign up to your weekly email briefing Keep up to date with a selection of the most relevant FT articles to help with your education and future career. Research suggests employers should care about the class pay gap for reasons other than a vague sense of social justice. Investment managers from low-income backgrounds consistently achieve better results for their clients than colleagues from affluent backgrounds, according to a December 2016 study by the National Bureau of Economic Research in the US. Because individuals from less-privileged backgrounds faced a greater number of obstacles to reaching prestigious positions, the NBER researchers found “only the most skilled” succeeded in getting a foothold in the first place. The study looked at fund managers who had got into the elevated position of running a fund, however. Often, people from less wealthy backgrounds never make it this far, the researchers found, saying “those born poor are promoted only if they outperform”. John Craven, a former derivatives banker, believes class determines promotion. He quit his job in 2012 to become a teacher. While he did well in sales, he believes the City is riven with social prejudice when it comes to client-facing roles. Many firms have a strong discourse of meritocracy, but as you attempt to climb the pyramid, you see it isn’t true The top roles in banking tend to involve revenue generation, he says. So managers assume employees who have more in common with clients will be better at making money. They will be given clients likely to do the most business with the bank. “You can’t entirely blame the banks,” says Mr Craven, who now runs social mobility organisation Upreach. “A [managing director] in a bank determining who should get promoted is acting rationally when they use strength of client relationships . . . as a significant factor.” Some organisations encourage social diversity at recruitment — for example, PwC, the global professional services firm, removed Ucas scores (a standardised school-leaving exam score used for university entry in the UK) as entry criteria for the majority of its graduate roles. Once past the graduate recruitment stage, however, little attention is paid to the “class ceiling”, says Louise Ashley, a lecturer at the Royal Holloway college at the University of London, who researches diversity and inclusion programmes. “There is very limited focus on the relationship between social background and career progression,” she says. “Many firms have a strong discourse of meritocracy, but as you attempt to climb the pyramid, you see it isn’t true.” As for Ms Adeyemi, she hopes clients will do business with her because of who she is. “I probably have to work three times as hard as other people, but I will embrace who I am. I hope it can be my unique selling point,” she says. Copyright The Financial Times Limited 2017. All rights reserved. You may share using our article tools. Please don't cut articles from and redistribute by email or post to the web. 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