The work histories of law, finance, and management all reflect a broader trend—they do not report exceptions but rather illustrate a new rule governing elite work. More than half of the richest 1 percent of households now include someone who works over fifty hours per week (which is over fifteen times the rate among the poorest fifth of households). Overall, prime-aged men from the top 1 percent of the income distribution work nearly 50 percent longer hours, on average, than their counterparts from the bottom half.
Elite jobs of all sorts nowadays demand hours—routinely, as a matter of course—that would have been thought unimaginable, because degrading, by an earlier, more genteel American elite. For centuries, the old order imposed a social taint on those who worked not from passion—for honor and exploit, or as a calling—but industriously, for wages. But that stigma, which remained at midcentury, has today been entirely erased and even reversed. Elite workers across all fields now valorize long hours and conspicuously and almost compulsively publicize their immense industry—including through their habits of speech—as a way of asserting their status. Meritocracy makes effortful and industrious work—busyness—into a sign of being valued and needed, the badge of honor.
Elite training, skill, and industry yield income as well as status. First-year associates at top law firms in New York and other big cities today earn about $200,000 per year (and effectively every Yale Law graduate who seriously seeks such a job gets one). Moreover, elite lawyers’ incomes grow markedly greater still as their careers mature. A law firm now exists that generates profits per partner exceeding $5 million annually, and more than seventy firms now generate more than $1 million of profits per partner every year. The partnerships at these firms are overwhelmingly dominated by graduates of elite law schools. Over half of partners at the five most profitable firms are graduates of law schools conventionally ranked in the “top ten,” and four-fifths of the partners at the $5-million-per-partner firm graduated from law schools conventionally ranked in the “top five.”
Specialist doctors, professional finance-sector workers, management consultants, and elite managers all also require elite degrees and again generally make several hundred thousand dollars a year. Incomes exceeding $1 million are startlingly common in all these fields. And the really top earners—managing directors at investment banks, C-suite executives at large corporations, and the highest-paid hedge fund managers—take home tens or hundreds of millions of dollars a year. As in law, the top employers overwhelmingly hire graduates of the very top schools—sometimes literally just Harvard, Princeton, Stanford, Yale, and perhaps MIT and Williams. Often, they do not even recruit new workers anywhere else. The economic returns to schooling have consequently skyrocketed in recent decades, and—especially at elite schools and colleges—double or even triple the returns to investments in stocks or bonds. This produces an astonishing segmentation of income by education.
In industry after industry, the labor market now fetishizes the skills that meritocratic education produces, so that super-skilled workers dominate production. At the same time, mid-skilled workers become redundant. In some cases, middle-class employment never recovers: mid-skilled manufacturing, retail, and middle-management jobs have notoriously disappeared. In other cases, a new work order segregates subordinate and superordinate workers: mid-skilled community bankers have been replaced by subordinate clerks on Main Street and superordinate speculators on Wall Street. Some of the newly subordinate workers even supply the booming market for personal services provided to rich households, whose members now work such long hours and command such high wages as to make it almost unreasonable for them to do their own chores.
Either way, innovation increasingly divides work into what might be called gloomy and glossy jobs: gloomy because they offer neither immediate reward nor hope for promotion, and glossy because their shine comes from income and status rather than meaningful work. (As meritocracy advances, and more middling jobs give way to gloomy and glossy ones, the lion’s share become gloomy.) Meritocracy’s shadow, cast over mid-skilled work, accounts for the darkness that engulfs gloomy jobs today, and its brassy light gives glossy jobs a false sheen. The meritocratic culture of industry helps to prop up the intense work effort required when a society concentrates economic production on a narrow elite.
AN UNPRECEDENTED INEQUALITY
Meritocracy’s two components, having developed together, now interact as expressions of a single, integrated whole. Elaborate elite education produces superordinate workers, who possess a powerful work ethic and exceptional skills. These workers then induce a transformation in the labor market that favors their own elite skills, and at the same time dominate the lucrative new jobs that the transformation creates. Together these two transformations idle mid-skilled workers and engage the new elite, making it both enormously productive and extravagantly paid. The spoils of victory grow in tandem with the intensity of meritocratic competition. Indeed, the top 1 percent of earners, and even the top one-tenth of 1 percent, today owe perhaps two-thirds or even three-quarters of their total incomes to their labor and therefore substantially to their education. The new elite then invests its income in yet more elaborate education for its children. And the cycle continues.
The sum total of elite training and industry, and of the elite labor income that meritocracy sustains, is absolutely immense. Meritocracy makes economic inequality overall dramatically worse today than in the past and shockingly worse in America than in other rich countries.
The top 1 percent of households now captures about a fifth of total income and the top one-tenth of 1 percent captures about a tenth of total income. This means that the richest household out of every hundred captures as much income as twenty average earners combined and the richest out of every thousand captures as much income as a hundred average earners combined. Compared to the period between 1950 and 1970, this roughly doubles the share owned by the top 1 percent and triples the share owned by the top one-tenth of 1 percent. Moreover, in spite of common complaints that capital increasingly dominates economic life, between two-thirds and three-quarters of these increases in fact come from growing elite labor incomes—from the massive paydays to superordinate workers just described. Rising economic inequality, that is, principally comes not from a shift of income away from labor and toward capital but rather from a shift of income away from middle-class labor and toward superordinate labor.
When they get big enough, differences in degree become differences in kind. At the middle of the last century, the economic distribution in the United States broadly resembled that in other rich democracies, including Canada, Japan, and Norway. Today, income inequality in the United States exceeds that in India, Morocco, Indonesia, Iran, Ukraine, and Vietnam. These national data cumulate local conditions, and narrowing the focus renders general statistics distressingly tangible: Fairfield County, Connecticut, for example, suffers greater economic inequality than Bangkok, Thailand.
America has become an economy and a society constituted by meritocracy, implemented through an unprecedented complex of competition, assessment, achievement, and reward, all centered around training and labor. This state of affairs—an immensely unequal economic order in which the richest person out of every thousand nevertheless overwhelmingly works for a living—has no precedent anywhere or anytime across all of human experience.
SEDUCED BY MERIT
A powerful instinct nevertheless defends these inequalities. Early moral victories against birthright privilege, combined with the new elite’s raw skills and vast energies, make it hard to quarrel with the idea that advantage should track effort and talent. Certainly this is better than the aristocratic worship of bloodlines that meritocracy displaced. Even in the face of rising discontent over the society that it has built, meritocracy itself retains an excellent reputation.
Meritocracy’s champions develop these intuitions. They insist that grades and test scores measure students’ academic achievements, th
at wages track workers’ output, and that both processes align private advantage and the public interest. Meritocratic practices reinforce these associations. Entire professions—educational testing, compensation consulting—work to improve and to ratify the connections. In these ways, meritocracy makes industry—effort and skill, converted into economic and social product—into the measure of advantage.
These connections enabled the meritocratic revolution to push aside dull, sluggish, and inert aristocrats, to open the elite to anyone who is ambitious and talented, and to arouse the superordinate workers whose vigor and dynamism now light up the culture and drive the economy forward. Meritocracy, according to this view, promotes widespread prosperity. The enormous productivity of the meritocratic elite ensures that even if the rich do better under meritocratic inequality, the rest still do well. Moreover, meritocracy further ensures that advantage tracks desert. Superordinate workers owe their huge incomes to their immense industry. Indeed, the triumphalist view proposes, meritocracy transforms inequality itself, to reconstitute its moral character. Meritocratic inequality therefore arises without either deprivation or abuse. Whereas aristocratic inequality was both wasteful and unjust, meritocratic inequality declares itself at once efficient and just.
Until the financial crisis of 2007–8 unsettled meritocratic self-regard, one or another version of this triumphalism ruled the ideological field, effectively unopposed by any substantial critics or even skeptics. Even today, critical voices remain muted, or at least distorted and defanged, by meritocratic triumphalism’s enduring power.
Meritocracy disguises its external effects and inner logics, and its institutions and rituals (universities, graduations) consolidate the disguise. Meritocratic practice projects meritocratic ideas onto everyday existence, to build the settings in which people live and narrate their lives and the fixed points around which their life stories revolve. Meritocracy lives through experience and not just logic, capturing the imaginations and limiting the critical faculties of those embedded in it. Indeed, meritocratic ideology and meritocratic inequality rise in tandem and drive each other forward, much as an immune system might select for more and more resistant parasites, which in turn render it increasingly indispensable. The disguise makes meritocracy—which is in fact contingent, recent, and novel—seem necessary, natural, and inevitable. Meritocracy wrong-foots critics of inequality by making itself appear inescapable—assuming all the powers of a tyranny of no alternatives.
Even critics of the rising economic inequality that meritocracy produces refrain from attacking meritocracy itself. One common complaint, which figures prominently in popular politics on both the left and the right, alleges that the rich do not in fact owe their incomes to merit at all but rather to nepotism and opportunism—to legacies of old-fashioned aristocracy. According to this view, elite schools and universities admit students based on cultural capital, class background, or legacy status rather than intelligence or academic ability, elite employers hire based on social networks and pedigree rather than skill or talent, and superordinate workers command their immense incomes through rent seeking or outright fraud. A second familiar criticism, developed in great detail by Thomas Piketty, attributes increasing economic inequality to a shift of income away from labor and in favor of capital and, in the extreme, to a rising oligarchy. According to this view, economic and political forces are reconcentrating wealth, redistributing income to become both more capital-intensive and more concentrated at the top, and by these means rebuilding an old-fashioned rentier elite as the economically and politically dominant caste in a twenty-first-century version of patrimonial capitalism.
Both arguments attack the current elite’s meritocratic bona fides. They reproach inequality for departing from meritocracy, and they implicitly cast more and better meritocracy as the solution to economic injustice. The most prominent critics of economic inequality—no less than those who celebrate current economic arrangements—therefore capitulate to meritocracy’s charisma, expressing rather than rejecting meritocratic commitments. Meritocracy has become the shared frame in which conventional disagreements about economic inequality play out, the dominant dogma of the age. Meritocracy, that is, has become the present era’s literal common sense.
This state of affairs arises directly out of meritocracy’s nature. To begin with, economic inequality in itself—inequality without deprivation—is hard to condemn without seeming a scold. As long as the middle class has enough, what is wrong with the elite’s having more, especially if it owes its great fortune to equally great industry? To complain smacks of envy. Charges of fraud, nepotism, and patrimonial capitalism give the case against inequality a more seemly face. They name clear wrongs and confer an aura of moral seriousness on economic inequality’s critics. Moral outrage then acquires a life of its own, and this makes accounts that emphasize economic inequality’s meritocratic roots (in elite training, effort, and skill) appear unduly sympathetic to the rich, unduly complacent about the world, and even quietist.
The commonplace objections to rising inequality also conveniently absolve their principal constituencies of primary responsibility for it. The intellectuals and other professional elites who advance these objections may belong to the 1 percent, but they can take comfort in telling themselves that they are neither fraudsters nor aristocratic rentiers. Complaints about gratuitous self-dealing and resurgent patrimonial capitalism allow superordinate workers to condemn economic inequalities from which they benefit without really questioning either their own income and status or the meritocratic system that secures both. Elites can say that the problem lies not with them but with others, and they can cast themselves as innocent bystanders to inequalities that they sincerely regret. They may shout their condemnations from the rooftops without ever admitting complicity, or accepting responsibility, or abandoning any commitments essential to their own survival. Indeed, focusing attention on the private vices of bad actors, and conspicuously distancing itself from these vices, only burnishes the broader elite’s meritocratic luster.
Nevertheless, the common view romanticizes much and conceals more. Although the moral wrongs that conventional complaints emphasize are real, these corruptions operate on the margins of the meritocratic regime. Fraud, rent seeking, and the resurgence of capital make real contributions to rising inequality, and diatribes against them denounce real targets. But the dominant causes of inequality lie elsewhere, inside meritocracy itself, and therefore on ground that inequality’s main critics find less congenial.
The selection processes for elite schools and jobs do include nepotism, but they remain overwhelmingly driven by achievement and skill, which is to say by good-faith judgments of merit. The intensive training that rich parents give their children produces massive achievement gaps, so that meritocratic admissions themselves skew student bodies dramatically toward wealth, and the meritocratic elite can produce dynasties even without nepotism. Indeed, this effect is so powerful that the students at the top schools can become wealthier even as the admissions process becomes more meritocratic and the size of the legacy preference declines. Universities, rightly condemned for the legacy preferences they deploy, make it difficult precisely to quantify nepotism’s effects on their student bodies. But an example illustrates how powerfully merit can dominate nepotism in producing a skew to wealth among elite students. Yale Law School, facing meritocratic pressures, including to maintain the sky-high LSAT scores on which the school’s ranking depends, has ended its practice of giving children of alumni an extra “point” in the scoring system that it uses to rank applicants. Nevertheless, the student body includes as many and in some years even more students from households in the top 1 percent of the income distribution than from the entire bottom half.
Similarly, although elite incomes do swell on account of self-dealing, they remain overwhelmingly driven by elite industry. A bank might gain millions of dollars in fees from sharp or misleading practices—as when Goldman Sach
s, in a deal called ABACUS that the Securities and Exchange Commission declared fraudulent, received $15 million for marketing asset-backed securities without disclosing that one of the portfolio’s principal architects (the hedge fund manager John Paulson) was betting against them. But these gains pale before Goldman’s total earnings, which amount to billions of dollars. More generally, while fraud accounts for billions of dollars of elite income, rising top income shares amount to trillions of dollars. Overall, the elite’s income growth remains principally driven by massive increases in performance-related pay.
Finally, although capital is seizing income share away from labor, perhaps three-quarters of the increase in the 1 percent’s income share comes from shifts of income within labor, as stagnant median wages coevolve with exploding wages for superordinate workers. Some specific instances of this pattern—for example, that large-firm CEOs were paid about twenty times a typical production worker’s income in the mid-1960s but are paid three hundred times as much today—are well known. But incomes across industries have followed the same trend. A cardiologist earned perhaps four times a nurse’s salary in the mid-1960s and more than seven times as much in 2017. Profits per partner at elite law firms have grown from less than five times a secretary’s salary in the mid-1960s to over forty times as much today.
The change is perhaps most dramatic in finance. David Rockefeller received a salary of about $1.6 million (in 2015 dollars) when he became chairman of Chase Manhattan Bank in 1969, which amounted to roughly fifty times a typical bank teller’s income. Last year Jamie Dimon, who runs JPMorgan Chase today, received a total compensation of $29.5 million, which is over a thousand times as much as today’s banks pay typical tellers.
All told, nearly a million workers do the superordinate jobs described earlier and capture the enormous wages that these jobs pay. And rising economic inequality mostly stems not from capital’s increasing dominance over labor, but rather from these superordinate workers’ increasing dominance over middle-class workers.
The Meritocracy Trap Page 4
