A new study from IESE Business School reveals that top earners are becoming increasingly isolated from lower-income workers, a trend that threatens social cohesion and may fuel political tensions. The research, which examined earnings segregation across 12 countries over nearly three decades, has significant implications for social mobility and equality.

The growing divide means that top earners are more likely to be surrounded by colleagues in the same income bracket, while being increasingly distanced from workers at the bottom of the pay scale. This separation risks altering how elites interact with society and how they are perceived by lower-income earners, contributing to rising social and political tensions.

A growing divide

The “great separation” between high- and low-income workers, the study suggests, may be linked to some of the major social and political challenges of our time.

The study spanned countries including Canada, Germany, South Korea, and Sweden, tracking changes in workplace earnings from 1990 onwards. Key findings show that the top 1% of earners are increasingly working alongside other top earners. By the end of the study, 12.3% of the coworkers of the top 1% also belonged to the top 1%, up from 9.2%. Similarly, for the top 10%, 33.9% of their coworkers were in the same income group, up from 27.8%.

At the same time, top earners are becoming more isolated from those at the bottom. By the end of the study, only 6.9% of the top 1%’s coworkers were from the lowest quarter of earners, down from 9.3%. The figures were similar for the top 10%, where only 7.9% of coworkers came from the bottom quarter, down from 10.2%.

Outsourcing work

This separation is particularly stark in sectors like manufacturing and finance. In manufacturing, the trend reflects increased subcontracting and outsourcing, where core companies rely on a network of lower-skilled suppliers. Finance, meanwhile, has the highest concentration of top earners.

Three key factors drive this earnings segregation: the shift from industrial to service economies, workplace restructuring through outsourcing, and digitalization, which reduces low-skilled jobs and creates more homogenous firms.

As top earners become more isolated, the report warns of the risks to social integration and calls for renewed attention to policies that address inequality.