Theme 04 of 43

Labor Market, Informality & Stratification

Bankers earn ten times more than teachers, and more than 5 million formal employment records sit locked at the 99-minimum-wage pay cap — more people than the population of Chile.

The formal employment records kept by RAIS, the Ministry of Labor's Annual Social Information Report, cover tens of millions of Brazilian workers — pay, race, sex, occupation, and sector for each one. CAGED, the General Register of Employed and Unemployed Persons, completes the picture with the monthly flow of hires and layoffs. Together, the two registries show a formal labor market stratified in sharp layers: who earns the most, who's coming in and who's going out, and — uncomfortably — who is likely defrauding the pay system itself.

Bankers versus teachers: a tenfold gap

The pay gap between the banking sector and basic-education teaching is a full order of magnitude. A banker earns, on average, the equivalent of ten basic-education teachers. That differential isn't a statistical footnote — it's one of the clearest signals of where Brazil's formal labor market directs its most talented young people, and why basic education loses that competition before it even begins.

Bankers earn ten times more than teachers — and it's that pay gap, not a lack of calling, that explains why the most talented young people gravitate toward finance instead of the classroom.

Who are the 5.4 million earning above the cap?

RAIS truncates pay values at 99 minimum wages, a cap originally designed to protect the privacy of top earners. The problem is how that cap is distributed by sector: construction and education show up with hundreds of thousands of employment records locked at that maximum value, numbers incompatible with the real pay levels of those activities. A salary cap concentrated in low-average-pay sectors isn't a statistical anomaly — it's a sign of fraud or serious distortion in how formal employment records are filed.

Construction and education register hundreds of thousands of employment records at the public-sector pay cap — a statistically impossible pattern only explained by fraud or systematic data distortion.

Gender at the top: men dominate

Among employment records at the salary cap, men are an overwhelming majority. The gap isn't small: there are more than a million more male than female records in that bracket, an imbalance that adds to the other gender barriers already documented in the formal market.

Men hold 52% more spots at the top of the pay scale — the formal market's ceiling has a gender, too.

The pay pyramid

The vast majority of Brazilian formal employment records are concentrated at the base of the pyramid, between 2 and 4 minimum wages. But at the top of the distribution, a number stands out on its own: more than 5.3 million records with pay above 50 minimum wages — a population comparable in size to the entire population of Chile, clustered at the ceiling of a single pay variable.

44.6 million records earn between 2 and 4 minimum wages, but 5.4 million earn above 50 — more people concentrated at the top of the pyramid than the entire population of Chile.

CAGED: hires versus layoffs by sector

The balance between hires and layoffs shows which sector is actually generating net employment. Services, retail, industry, and agriculture all close the period in positive territory. Construction is the one significant exception: more people leave than enter, a pattern consistent with the most informal and highest-turnover sector in the Brazilian formal market.

Construction is the only sector with a negative employment balance — the mark of a sector defined by informality and high turnover.

Informality: four in ten workers

Nearly four in ten Brazilian workers are informal, without a signed work permit and without the labor rights guaranteed by the CLT (labor code). Add self-employed workers without a CNPJ, and Brazil has nearly half its workforce outside formal labor and social-security protection — an enormous contingent exposed to any economic shock with no safety net.

Nearly half of Brazilian workers have no guaranteed labor rights — paid leave, year-end bonus, and FGTS severance fund are a privilege, not the rule.

RAIS: pay by occupation — occupational segregation

Cross-referencing average pay with Black workforce share by occupational group, the pattern repeats cell by cell: the higher an occupation's average pay, the smaller the Black presence within it. Directors and managers, the best-paid group, have the smallest Black share in the table; agricultural and service workers, the worst-paid groups, have the largest.

The higher an occupation's pay, the smaller the Black presence — a structural occupational segregation, not an isolated statistical effect.

Gender inequality in the formal market

Women are a minority among formal employment records, earn on average significantly less than men, and hold a disproportionately small share of management positions. The combination of lower participation, lower pay, and less access to leadership roles forms a glass ceiling that runs through the Brazilian formal labor market from end to end.

Men earn 28% more than women in the formal market and hold 65% of management positions — the glass ceiling shows up in every cut of the data.

Explanatory hypotheses

The gap between bankers and teachers can be explained by the capture hypothesis: the financial sector has the power to shape public policy and market practices in ways that keep its pay elevated. Occupational-choice theory explains why students with good options migrate to finance — the pay premiums there are simply larger. The connection to gender shows that caregiving sectors, like teaching, are systematically undervalued, often because they've historically been occupied by women. And racial occupational segregation perpetuates itself, in large part, through predominantly male and white networks of contacts that recruit their own peers for the highest-paying positions.

Policy implications

Regulating financial-sector pay could help reduce part of these structural inequalities. Teacher-valuation programs, already provided for in the National Education Plan, need to move off paper and actually be implemented. Cross-monitoring of employment records at the 99-minimum-wage bracket combined with age under 18 could work as an automatic payroll-fraud alert. Extended maternity leave and quality public daycare could raise women's participation in the formal market. And diversity policies in management roles need to stop being voluntary and become mandatory, with clear targets and accountability.