The picture of Australian households painted by University of Melbourne’s Household, Income and Labour Dynamics in Australia (HILDA) survey confirms that the Australian economy has entered a protracted period of stagnation in which the benefits of economic growth are no longer going to households, and the pact between policymakers and voters that pro-corporate policies and deregulation would deliver rising incomes has been broken.
The longitudinal study of thousands of households illustrates how incomes have stagnated or fallen, social mobility is difficult and male workers have seen real wage cuts over the last six years.
The survey confirms what every working Australian outside a c-suite or Coalition minister’s office knows: our incomes are flat or declining. Mean household disposable income, which grew strongly in the years before the financial crisis, has grown just 3.2% in real terms since 2010 and 0.2% since 2013 (that’s not an annual figure, that’s the total growth). Median household incomes — the mid-point of household incomes — have actually fallen slightly since 2013 after growing 2.5% between 2010 and 2013. When examined on an adjusted per person basis, real mean incomes have grown by 0.4% in total since 2013 and median incomes have been flat.
The survey shows, however, that it is male workers that have borne the brunt of wage stagnation. Weekly earnings for females have slowly trended upwards across all incomes since 2001, with stronger growth before the financial crisis and in the last three years. Male workers, however, have had no earnings growth in real terms in recent years, or in the case of high income earners, have gone slightly backwards.
This, coupled with the strong growth in female participation in recent years (also a feature of the Howard years), suggests that, while it may have happened under both sides of politics — female participation and wages growth are heavily driven by increasing government investment in health and education, which are big employers and dominated by women. The Coalition should get the credit for the economic empowerment of women as well as the blame for economic stagnation.
Alarmingly, however, even the period of strong incomes growth before the financial crisis hasn’t been enough to generate real social mobility. In Australia, your parents’ income strongly determines what income you will earn. The long-term nature of the HILDA study now allows researchers to look at the incomes of people compared to the incomes of their parents at the start of the study in the early 2000s.
It shows that at least a third of people whose parents were in the lowest income quintile end up in that quintile themselves. Between 50% and 60% of people from lowest-quintile backgrounds end up in the bottom two quintiles. Less than a quarter ever make it into the top two quintiles. Equally, those born into high-income families do very well: more than half of people whose parents were in the top quintile end up in the top or second-top quintile themselves; less than one in ten ever end up in the bottom quintile.
Whether this lack of social mobility is worsening or improving isn’t clear — it will take several more years’ worth of data to determine how the pattern is changing. However, the survey also shows that poverty, measured in actual income terms rather than as a relative measure linked to overall incomes, fell dramatically in the years to 2012 to below 4% of the population, though it has remained relatively unchanged since then.
The outcomes suggest that Australia’s economic stagnation, where it can be remedied with government spending, is relatively easily addressed: increased government spending in health and education has driven female participation and wages up; direct welfare spending — despite the government’s obnoxious and increasingly isolated hostility to Newstart recipients — has helped address poverty.
Where failure lies is in more complex policy challenges: restoring the surge in labour productivity that Labor oversaw in government, bringing to life our comatose capacity for innovation, managing the decline of traditional male sectors like manufacturing and, above all, levelling the playing field between workers and corporations so that the benefits of economic growth once again start flowing as much to households as to shareholders.
And what makes it worse is that, rather than “entice” their business/sponsor/patron/cronies to pay their serfs more (instead of racking up profits -> the more for executives and share-holders to pocket) so that we mere wage slaves will have more discretionary spending (on such bagatelles as education, health, dental/care, cars, groceries etc ) to stimulate the economy : this government gives out “sanga and a milk-shake” tax cuts, that will cut government consolidated revenue that could be spent on services more plebs will need, because their “wage” won’t stretch that far, and they’ll go without til it’s crisis point – and cost more to address?
At least in the onrushing future when the rich have entrenched themselves in small areas, preferably walled, they will be much easier to harvest.
When, not if, required.
Yes I don’t think the rich (eg Peter Theil types) have thought it through. Even if they have “guards”, those will quickly turn and murder them as well.
The economic stagnation of our economy is a direct result of the fact that for the majority of the last 50 years the government of Australia has been conservative, this created the control of economic policy to be directed into the hands of the greedy rich and multi nationals, redirecting the tax burden onto ordinary people and allowed political and corporate corruption to flourish but the real entrenchment of this corruption began with the election of the howard government and its subsequent neo conservative successors who have intensified this process, with the destruction of the union movement coupled down with the dumbing down of a large section of the voting base and the feeling of helplessness rife amongst the population this downward spiral will intensify, my cousin is in Barcelona and he was amazed to see that the poverty was much greater now in Sydney then there, even though Spain was much more severely impacted economically by the GFC the people would not allow the draconian policies the conservatives have inflicted on us here to be used in their country, most of Europe has left Australia well behind in pensions,health, education and incomes, we are fast becoming the ‘POOR FELLA MY COUNTRY’ of literary fame, and dare I say it, serve all you dumb bastards right.
Dare to say it, bb…you speak the truth!
Bring on the revolution I say…we will have to rescue the voting morons from themselves!!
My apologies, Crikey. You have lost your sense of humour, then?
Saw a video by Robert Reich on YouTube where he describes certain laws enacted in some US states designed to diminish the power of unions.
He states that 1/3 of the workforce belonged to a union when Reagan came into power, but now the number is 7%.
And that wage stagnation in the US has been going on since that period, and there is now a push to expand those anti-union laws into more states.
A lot of what he says about the US economy is very familiar.
It looks like we are following the US lead, albeit a decade or two behind.
“restoring the surge in labour productivity”
One has to wonder if the desire of workers to be more productive has waned since their previous improvements have not been rewarded.
A very dear friend of mine (since sadly depaparted), said to me when enterprise bargaining was being introduced,”OK mate, what happens when we haven’t got anything left to bargain with”.on another slightly different theme, the solidarity that once existed between workers has all but disappeared. Here is just one example.A man of my acquaintance has a relatively menial job in an insurance company and likes to praise the policies of the coalition and has an abiding hatred of unions.when taxed with the question one day as to why he was so anti-worker he replied, “I’m not a worker, I’m an executive”.I think this particular case can be mirrored tens of thousands of times throughout Australia, mores the pity.
So true Malcolm!
The folly of the Hawke / Keating years of neoliberalism, through deregulation of the financial sector, wages accord with the the ACTU and the national competition policy and then to cap it all Keating’s comment about the “recession we had to have”.
In setting it up for Howard to continue and expand, is it any wonder the “true believers” became the “Howard battlers”?
No clearer message was observed by me in the federal electorate of Lindsay where a teacher at a school / polling place was handing out how to vote forms for the sitting Labor candidate and a school cleaner was handing out how to votes for the successful Liberal candidate.
Is it any wonder Labor is becoming increasingly irrelevant in our political landscape.
So Ian…did you ask the ‘school cleaner’ what she thought the L/NP government was going to do for her?
In the three months since the election, even those with half a brain would have to conclude…NOTHING!
Oh!…and just a small reminder…the Coalition are the government…NOT Labor.
If this country is to be saved from itself…EVERYONE should join their respective union. But by the time they all wake up, I suspect it will be too late, and the damage will already be done. We are now well on the way to the total destruction of this country…another 3 years will just about do it!!
Productivity is conservative speak for, “you work longer and harder for less pay to make your masters richer” and guess what, thats exactly what you dumb bastards will do. stuff the lot of you wimpering economic servile cowards for what you`ve done to my country and my kids and grandkids, I`m going to sit back and enjoy your suffering and whining at least for the next 3 years.
Things have worked out the way the designs of the powers-that-be took things naturally – now they want to whine about how it hasn’t worked out the way they promised?
Must be someone elses’ fault?
How much are we paying these incompetent malignant f-wits to screw up so monumentally?