In The Price of Everything I write about how pay is becoming increasingly lopsided around the world. The trend is evident from top entertainers to star chief executives at big multinational corporations: superstars are reaping a growing share of the revenues in their fields, leaving less and less for everybody else.
An article in the Wall Street Journal points out that the same thing is happening with lawyers: superstar attorneys are earning up to 10 times the amount given to other partners, about double the spread of a decade ago.
As in other fields, the driver of this trend is globalization and technological progress, which has allowed the top ranked superstars achieve enormous scale. New media technologies allow a small set of global pop stars or sports icons to reach audiences around the world, boosting their fan base and revenue pool at the expense of lesser performers. Similarly, as businesses have become bigger and more global, they have flocked to the top lawyers, who have become the rainmakers for their law firms.
The article in the Journal points out that this trend could undermine the partnership ethos of a law firm. More broadly, I believe it severely undermines social cohesion. Over the past two decades, the income of the typical American household has risen just 3 percent after inflation, to just under $50,000. (Table A-1) By contrast, the incomes of the richest one percent of American families grew 53 percent over the period to $906,000, even excluding capital gains from their stocks and bonds (Table A4). Including capital gains, these topmost families today reap 21 percent of the nation’s income, 10 percentage points more than two decades ago
This is splitting the nation and the world into two worlds: the plutonomy and the rest of us. I doubt the trend can continue unabated for long.