all this apparent decline, the 1970s did not see any discernible changes in inequality of incomes, nor in relative social mobility levels. The rungs of society's ladder were no wider, but movement between them no greater.
With 91 per cent of Cabinet members educated at private schools, Margaret Thatcher's Conservative government in 1979 looked strikingly similar to Macmillan's two decades earlier. Thatcher, the grammar-school-educated daughter of a shop keeper, would end the post-war consensus on state intervention, adopting a Darwinist approach to social mobility (Mandler, 2015). Individuals and families would improve their lives through competition based at least in theory on hard work and a little self-help. Thatcherism introduced a new language of aspiration.
Ages of Growing Divides (1980–2008, 2008–20)
The 1980s, 1990s and 2000s were the decades of rising inequality (Brewer, 2019). In the 1980s inequality increased throughout the earnings distribution. The result was the fanning out of earnings, shown for selected percentiles of weekly wages through the decade. The 1990s and 2000s saw the highest earners pulling away.
Figure 2.2 highlights the trends in absolute mobility over 40 years. Real wages grew for all three of the pictured percentiles until a peak level reached around the onset of the global financial crisis in 2007–8. Top-end earners at the 90th percentile experienced real wage growth of 103 per cent at its peak, with median earners growing 63 per cent, and bottom-end earners at the 10th percentile by 25 per cent. Even though the highest earners fared a lot better than the others, and the middle in turn did better than the bottom, all three groups experienced real wage growth over these years.
Figure 2.2 Wage trends, 1980–2019
Note: Hourly wages deflated by consumer price index (CPI), indexed to 0 in 1980.
Source: New Earnings Survey/Annual Survey of Hours and Earnings
This meant that a high proportion of people were earning more than their parents were at the same age, signalling improved absolute intergenerational mobility. After the peak, real wages dropped for all the percentiles. They fell more for the top earners, helping to narrow inequality. However, the figures demonstrate that inequality in wages was substantively higher in 2019 than it was in 1980. Wages increased by 93 per cent for those at the 90th percentile, 58 per cent for those at the 50th percentile, and 30 per cent for those at the 10th percentile. These real wage falls, which were not experienced by parents at the same age some three or four decades earlier, mean that absolute intergenerational mobility has been falling.
Rising Inequality (1980–2008)
The deep recession of the early 1980s hit the country hard. Some areas in the Midlands and the North that had previously benefitted from the manufacturing industry never recovered, and still suffer high rates of joblessness to this day (Amior and Manning, 2018). As we have seen, the 1980s saw a big rise in the earnings gap between the richest and poorest as technological changes and weakening of collective bargaining yielded labour market gains to more educated workers. Those with less education increasingly lost out (Machin, 1996). The government's victory in the bitter miners’ strike of 1984–5 signalled profound changes in society: the diminishing power of the unions, and the loss of local jobs in large swathes of the country.
Behind these neoliberal reforms was the paradigm of trickle-down economics: free markets might lead to higher inequality, but the wealth at the top of society percolates down to make everyone better off. George W Bush, who became US President in 2001, later summed up the belief on both sides of the Atlantic. Free market capitalism, he proclaimed, was ‘the engine of social mobility – the highway to the American dream'.
The 1980s saw wage inequality rise rapidly as the whole distribution fanned out as each percentile above that below experienced faster wage growth, as shown in Figure 2.2. In the next two decades the anatomy of rising wage inequality altered. Wage inequality rose rapidly in the top half of the distribution, but narrowed in the bottom half. Salaries for lower earners benefitted from the National Minimum Wage introduced in 1999, as they experienced faster wage growth than those in the middle of the distribution. Middle earners also saw some gains through ‘spillover’ or ‘knock-on’ effects: they benefitted even though they were not targeted by the policy.
The occupational structure of work continued to shift. By 1991, the managerial and professional classes made up 35 per cent of the working male population and 27 per cent of the working female population. Where once there had been room for the working classes to climb up to, there were now increasing numbers of people concerned only with sustaining their lofty positions at the top of the social hierarchy. The 1980s also witnessed the wholesale cull of middle-management jobs as corporates downsized as part of managerial reforms (Heckscher, 1995).
Educational inequality also rose during this period. Elected in 1997, the New Labour government left intact the market-based policies for schools ushered in by the 1988 Education Reform Act, including published school league tables and school inspections alongside a national curriculum. A series of education initiatives followed, from Sure Start centres to new autonomous state schools (academies).7 There was more funding for schools and early years support. The aim was to close the gap between poorer children and their more privileged peers. However, by most measures there was only a tiny reduction in the attainment gap during 1997–2010. And the proportion of young people aged 16–18 who were not in education, employment and training (so called NEETs) remained stubbornly high.
This was also the era of higher education expansion. In 1992, former polytechnics became fully fledged universities. Continued expansion was made possible by tuition fees in England, introduced in 1998 and raised to £9,000 a year in 2012. In 1980, 9 per cent of 26–30 year olds were university graduates; by 2019, 45 per cent of 26–30 year olds had a degree.8
For all this expansion, the graduation gap between rich and poor widened. Figure 2.3 records the percentage of all young people who graduate from university by age 23 and compares those from the poorest fifth of families with those from the richest fifth (denoted as poorest and richest quintiles on the figure's legend). It also shows educational inequality in 1981, 1993, 2005 and 2017 defined as the graduation gap between richest and poorest quintiles. This metric of education inequality nearly trebled between 1981 and 2017, with the most rapid increases occurring in the 1980s and 1990s, but continually rising at a slower rate of increase up to 2017. After three and a half decades, the graduation rate for those from the poorest families (16 per cent in 2017) was still lower than the rate for those from the richest families in 1981 (20 per cent).
Figure 2.3 Degree acquisition and education inequality, 1981 to 2017
Notes: Degree completion by age 23 for all people, for the bottom and top 20 per cent of the family income distribution (respectively the poorest and richest quintile) when aged 16 and the gap between the top and bottom quintile in 1981, 1993, 2005 and 2017. 1981 and 1993 numbers based on the 1958 National Child Development Study and the 1970 British Cohort Study, taken from Blanden and Machin (2004). The 2005 and 2017 numbers are own calculations, respectively from the British Household Panel Survey and from Understanding Society data.
Increased numbers of disadvantaged students enrolling at universities were observed across the UK, despite the introduction of university fees in England in 1997. But the extra charges for degrees, required to fund the continuing expansion of universities, coincided with falling numbers of part-time and mature students. At the same time, the gap in entry rates between advantaged
