SMC Report Finds that Social Mobility across England is a ‘Postcode Lottery’

A socially mobile country provides equal opportunities for everyone, irrespective of circumstances of birth.

The Social Mobility Commission’s previous work identified a series of ‘hot’ and ‘cold spots’ across England, reflecting varying prospects in terms of education and employment. What this research did not tell us was the degree to which the place you grow up has a lasting impact on your earnings in adult life.

It uses new data, never before available to researchers, to track the journey of all state-educated sons* in England, born 1986-1988. We follow them through their school journey, charting their transition into work under the strain of the 2008 recession and finish on a snapshot of their earnings aged 28.

* We only tracked sons as it was not possible to provide reliable estimates for daughters, given that adult earnings measures cannot be adjusted for part-time work.

The report reveals stark inequalities and confirms what many of us have long suspected – that where you grow up truly does matter. Two sons from equally disadvantaged family backgrounds will earn very different amounts as adults, simply based on where they grew up.

“These findings are very challenging” said Steven Cooper, interim co-chair of the Commission, “they tell a story of deep unfairness, determined by where you grow up. It is not a story of North versus South or urban versus rural; this is a story of local areas side by side with vastly different outcomes.”

Depending on where they grew up, sons from disadvantaged families can earn twice as much as their counterparts in other areas of the country

In areas with the highest social mobility, they will, by age 28, earn more than twice (over £20,000) that of their counterparts who grew up in areas with the lowest mobility (under £10,000). Annual earnings for this group range from £6,900 (Chiltern) to £24,600 (Uttlesford).

Alfie Casey who lives in Welwyn Hatfield, a local authority area with higher-than-average social mobility, says: “I still live at home with my parents, so I only pay a small amount for rent, and I have enough money to live on. We are a working-class family, but we have never been poor.”

Social mobility in England is a postcode lottery, with a deep gap in earnings between the sons from disadvantaged and affluent families.

Unsurprisingly, there is an even wider pay gap between adults from affluent and disadvantaged families. At a national level, those from affluent backgrounds earn, on average, more than £27,000 a year – that is double the income of those from the most deprived families (c.£13,000 a year).

This gap also varies significantly across the country. The pay gap in the least socially mobile areas is 40% larger than in areas with high social mobility.

What this shows us is that there is unequivocally a postcode lottery when it comes to social mobility across England.

In the most unequal areas of the country – namely those with the largest pay gap and the poorest social mobility – up to a third of the earnings gap is driven by family background and local labour markets, over and above education.

Education still matters. It remains the key driver of the gap in adult earnings between sons from disadvantaged and affluent families – but in parts of England where inequality is already less pronounced.

Across local authorities, education gaps between sons from poor and wealthy families explain, on average, around 80% of the gap in adult earnings. But in areas where existing inequalities are greater, education alone will not improve social mobility.

Those from disadvantaged backgrounds perform less well at school and are less likely to attend university than their peers from wealthier backgrounds, despite growing up in the same area. But we have found compelling evidence that inequalities in adult earnings are also driven by factors outside education.

The missing piece of the jigsaw – family circumstances and the wider economy

Gaining an education and moving to another part of the country is not in itself enough to fix all the inequalities ingrained at birth, due to where a child is born. This tells a story of deep unfairness.

Education alone is not enough to get on in areas of low social mobility. For instance, in Bolton, an area that has been classed as a ‘cold spot’, only 56% of the pay gap can be explained by education. In the least socially mobile areas, relative educational performance explains only two-thirds of the adult pay gap. So what accounts for that remaining third?

In areas with low mobility, it is the lasting shadow of family circumstance – up to 33% of the pay gap is driven by family background, over and beyond educational achievement. And we see the lasting effect of family background on individuals with similar education levels. This is because deprived areas offer fewer opportunities in terms of the proportion of people holding professional and managerial roles, so even a university education is not the ‘fix all’.

Our report Moving out to move on: Understanding the link between migration and disadvantageshowed that the there is a 33% differential in earnings for those who move areas; partly explained by the fact that movers tend to be more highly educated (56% have a degree). That is because those who stay behind may suffer from a lack of opportunities, remaining in areas that lack the economic infrastructure and offer fewer well-paid jobs.

So even with an education, unless an individual moves to an area that offers better prospects, it will be difficult for them to get on and close that earnings gap. However, there are still other factors at play.

Going back to our current report, we’d do well to remember that this cohort entered the labour market around the time of the ‘Great Recession’ of 2008. Previous research has shown that the most deprived are hardest hit in difficult labour markets – possibly because those from more affluent families are better placed to cope by moving away or take advantage of their family’s financial, social or cultural support to tap into the limited opportunities available.

If family background is indeed more important when there are limited labour market opportunities, COVID-19 threatens to further increase pay gaps between the poorest and most affluent families.

According to a recent survey from the Sutton Trust almost half of current undergraduates believe the pandemic has had a negative effect on their chances of finding a job and 61% of employers offering work experience placements have had to cancel their schemes.

So how can we address these challenges and ‘level up’?

Since labour markets play such a critical role, employers need to be part of the solution.

Location, location, location

The SMC would always encourage employers to expand the geographical diversity of their workforce by recruiting beyond their physical headquarters and setting up flexible working arrangements. This enables people to continue working in their local area, or from home, so that they don’t have to choose care duties or support networks over their career.

Through our research, we have identified the ‘coldest’ spots in the country – and this is a literal road map for employers, local authority leaders and government on where to target efforts. We are keen to help local leaders and employers to provide the right opportunities in the areas that need them most.

Often people have good reasons not to want to leave their community (as highlighted in our Moving Out to Move On report), but forward-thinking employers can leverage the best talent by allowing them to stay in place.

The Civil Service itself has a role to play as a leading employer. In our 2020 monitoring report, we praised the civil service’s efforts to expand outside of London, but we also encouraged it to do more to target job opportunities in cold spots and ensure progression opportunities are available nation-wide.

Creating a more level playing field

Secondly, we need to look at equalising the opportunities available to young people.

Those from less privileged backgrounds may lack the family connections or knowledge to help them gain good jobs. They may lack role models within their immediate network of friends and family or fully understand the differentials in income between different jobs or industries. This can leave young people from less privileged backgrounds with a smaller frame of reference.

Yet according to Accenture’s 2019 Getting to Equal report, an ‘innovation mindset’ is six times higher in the most-equal cultures. While inclusive teams create efficiencies – they make better business decisions 87% of the time and twice as fast[1].

We would also urge employers to carefully consider whether traditional qualifications are truly needed for a particular role. It may be possible to bypass GCSEs or A-levels for those working at a call centre, for instance. Life experience, motivation and determination may be all the skills required to succeed in certain roles, so where possible employers should try to open these up to a wider pool of talent.

Building a strong outreach programme is a critical step in ensuring that, as an employer, you are reaching that talent. You can, for instance, move beyond the same-old places: target FE colleges and schools in social mobility ‘cold spots’ and use empowering language in job adverts, with a focus on potential rather than existing qualifications where possible.

For more practical measures, employers can visit the Toolkitsection of our microsite, which provides guidance on how to develop strong outreach, hiring and progression pathways in order to tap into the widest possible pool of talent available.

Our key findings show that:

• Social mobility in England is a postcode lottery, with large differences across areas in both the adult pay of disadvantaged adults and the size of the pay gap for those from deprived families, relative to those from affluent families.
• Disadvantaged young adults in areas with high social mobility can earn twice as much as their counterparts in areas where it is low – over £20,000 compared with under £10,000.
• Pay gaps between deprived and affluent adults in areas with low social mobility are 2.5 times larger than those in areas with high social mobility.
• In areas of low social mobility, up to 33% of the pay gap is driven by family background and local market factors, over and beyond educational achievement.
• Characteristics of the coldest spots: fewer professional and managerial occupations, fewer outstanding schools, higher levels of deprivation and moderate population density.

---

[1]  Cloverpop, White Paper: Hacking Diversity with Inclusive Decision-Making