Abstract
Abstract Though the literature on perceptions of inequality and studies of ‘elites’ have identified the importance of meritocratic beliefs in legitimating inequality, little is known about the role of pay setting processes in sustaining ideals of meritocracy. Drawing on 30 in-depth interviews with UK-based top income earners working mainly in finance, I analyse how top income earners perceive economic inequality. My study highlights the crucial role of performance pay for perceptions that top incomes are meritocratically deserved. Participants expressed the view that performance pay, an increasingly prevalent pay-setting practice, ensures that top incomes reflect a share of economic ‘value created’ for shareholders, clients or investors. Focusing on narrow, economic criteria of evaluation perceived as objective, the majority of respondents (‘performance pay meritocrats’) justified any income difference as deserved if it reflects economic contribution. Meanwhile, a minority of respondents (‘social reflexivists’) applied broader evaluative criteria including distributive justice and social contributions.
Highlights
Studies have highlighted that many citizens legitimate income differences as meritocratically deserved (Sachweh, 2012; Mijs, 2021) and that ‘elites’ use the argument of meritocracy to justify their advantage, claiming that it is based on their hard work and talent (Khan, 2011, 2012a; Sherman, 2017a, 2018; Kantola and Kuusela, 2018; Schimpfossl, 2018; Kuusela, 2020)
How do top income earners in the UK perceive economic inequality as measured by top income shares? Participants explained that top incomes are largely the result of performance pay and are meritocratic
Performance pay is crucial for the justification of meritocracy, and the legitimation of inequality
Summary
For about two-thirds of my participants, whom I term performance pay meritocrats, economic contribution justified any income difference as meritocratically deserved They were not concerned about rising top incomes, arguing that the market should determine top income shares and tended to not agree that it should be the government’s responsibility to reduce income differences between the rich and the poor. Performance pay and top income earners’ perceptions of inequality term social reflexivists, questioned the deservingness of top incomes They applied broader, social evaluative criteria to consider the magnitude of top incomes, matters of distributive justice and whether pay reflects a contribution to society. These participants expressed concerns about inequality, arguing that top income shares should be lower, and that the government should reduce income differences. My study emphasizes that pay-setting processes in ‘elite’ firms, performance pay, are important for top income earners’ beliefs in meritocracy
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