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Dr Neil Lee

Mapping inequality in the UK labour market

Authors: Dr Neil Lee Dr Neil Lee

07 May 2013

The UK labour market is relatively unequal – both between people and between places. Technological change, globalisation and the rise of the knowledge economy have all led to increasing wage inequality and a more polarised employment structure. At the same time, while certain cities have gained from these changes – developing successful, knowledge based economies – others have suffered relative decline. Yet despite these important trends, we know little about the map of inequality in the UK: which cities are most unequal and why.

In a new report funded by the Joseph Rowntree Foundation,  we investigate wage inequality and employment polarisation in British cities. We find that the most unequal cities also tend to be the most affluent: cities like Guildford, Reading and, of course, London, are rich and unequal. These cities have gained from the changing economy and experienced economic growth – yet the benefits have not been shared equally.

Urban inequality matters. The costs of living, particularly housing costs, tend to be significantly higher in these cities, making life disproportionately harder  for those on low incomes.

In contrast, cities with relatively equal labour markets tend to have less successful economies. Cities with lower wage inequality such as Sunderland or Bradford tend to have experienced long-term economic difficulties and have fewer of the highly skilled residents so important in the changing economy. They are not equal because all earn high incomes, they are equal because few do.

So what can cities do? It would be difficult to address inequality at the top of the distribution at a city level – particularly for cities which are trying to grow their economies. It is for national government to take the lead in addressing inequality at the top of the distribution.

But cities have a vital role to play in addressing the problems faced by those at the bottom of the labour market. They can help reduce the cost of living by ensuring housing supply matches demand. Some cities also have powers over skills which can help ensure low skilled residents are able to access the often relatively buoyant labour markets of more unequal cities. They can also develop local policies that help to improve prospects for wage progression for low earners.

This is a major area of concern for cities. Yet so far there has been little evidence around the geography, determinants and implications of labour market inequality. It is this gap that our research has set out to fill.

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