What is a big salary?

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This is from the BBC, and I’m quoting a big chunk as I think it illuminating:

Rarely a day seems to pass these days when there is not soul-searching over how much people are paid, whether it's bankers' bonuses or public sector salaries.

But are we clear about the levels of earnings that we are worried about?


Before you even get into what constitutes a "big" salary in the UK, you must first tackle the question of what an "average" salary is. Boris Johnson [recently] referred to £250,000 as 'chicken feed'

The Office for National Statistics' Annual Survey of Hours and Earnings (ASHE) provides some of the most reliable figures.

According to ASHE, "mean" gross annual earnings across all employee jobs in 2008 came to £26,020. You may think that's rather a high "average" salary. And if you look just at the figures for full-time employees, that figure rises to £31,323.

Another way of measuring it is "median" gross annual earnings. According to ASHE, this was the more modest figure of £20,801, across all employee jobs. If you are earning that sum a year, you are "Mr or Mrs [or Ms] Mid-Point" - precisely half the surveyed working population earns less than you and half more. For just full-time employees, the median rises to £25,123.


It's safe to assume that for many people, mere entry into the top half of the earnings pyramid does not mean you are earning a "big" salary.

How about the top 25%? A gross annual salary of £31,759 - measured across all jobs - gets you into that club.

How about if you make the top 10%? The ASHE figures reveal that a salary of £44,881 is enough to just edge into that top bracket.

A gross annual salary of £58,917 gets you into the top 5%.

But the standard that has cropped up in newsprint over the years is "the top 1%". It takes £118,027 to get into this bracket. And if you are earning £150,000 - the amount that triggers 50% income tax - you are in the top 0.6% of salaried people, according to the ASHE.

Now there are problems with this data. For example:

The ASHE is a sample of 1% of people who pay tax via PAYE. It doesn't include the self-employed - businessmen, contractors etc - who make up the ranks of the really wealthy.

But it’s incredibly important to remember what is ‚Äònormal’. The City, Tory politicians and those who advocate big cuts in government spending have no clue. That’s very clear. And worrying, because it horribly distorts their decision criteria. When you’re on £100,000 there is slack in a household budget. But most are on vastly less than £45,000 – and at that level things get a lot tighter.

This is the reality against which the debate on cuts should be considered.