QUESTION: Why is there a sharp decline in the salary differentials for areas in the UK as income levels increase?
Example: If you compare London (the "Comparison City") against an area in the United States (the "Base City") you would most likely see a decline in salary structure percentages:
Generally speaking, in areas outside of the US, top level jobs are paid much less (proportionally) when compared to their counterparts in the United States. This is due to many factors including minimum wage laws, social and political influences, labor unions, etc.
However, please notice that, while salary structure percentages decline, the cost of living differentials remain very high. This is due to the fact that London is still a very expensive place to live compared to most areas in the US, regardless of salary level:
Just because a place is expensive does not mean that individuals are paid well at all levels.
•Salary and wage levels represent and reflect the demand and supply for employees.
•Cost-of-living represents the demand and supply for the goods and services that are purchased by these employees.
For more information, please see COL Differentials vs. Wage/Salary Differentials.