We know Australians are suffering economic pain. But who is getting hurt most? When the screws tighten, they don’t squeeze us all equally. Many Australians have reasons to complain, but hard data will tell us who is most under pressure, while the latest data from the Commonwealth Bank’s incredibly rich new Household Spending series provides insight into who is tightening their belts most.
Of course, everyone has reason to. The kids are cross because rents and interest rates are high while house prices haven’t come down that much. The millennials are cross because they bought their houses at the peak and now their mortgage repayments have gone up enormously. Gen Xers are cross about the rising cost of living. The baby boomers are cross because their money is in super and the market is still not above its 2008 peak. Finally, the elderly are cross because they are on the pension and it’s not a lot.
Let’s have a look at who is actually in the most pain as the economy worsens. As the next chart shows, the biggest spending fall is from the millennials. They spent around 8% less in the first three months of the year compared to the last three months of last year. That’s a sign that theirs are the budgets under the most pressure. But millennials at least are seeing a little income growth.
Regarding baby boomers, their spending has fallen less, but their income has taken a hit. Of course, this may be due to lifecycle effects. We’d expect retirements and semi-retirements among baby boomers would mean their salary income in any given period may be lower than the preceding period. Still, dealing with rising prices just when your income is transitioning from salary to super drawdowns can’t be easy.
The group I’m worried about the most right now is gen Z. Gen Z is defined usually as people born in 1996 or later. They’re in their late teens or early-to-mid 20s and they should be seeing big income growth. Remember, when we talk about wages rising 3% or 4% a year, that’s on average for the whole cohort, including people whose careers are winding down. Young people should be seeing much higher growth than that as their careers begin and then accelerate. You can add 20% to your wage at the end of your first year. But instead gen Z has had zero wages growth. This is quite a contrast with the same dataset pre-pandemic, which showed gen Z having the fastest wages growth.
That said, let’s remember members of gen Z are graduating into one of the best labour markets since the baby boomers got their degrees. That counts for a lot. Their circumstances may look perilous in the here and now, but over their lifetimes their job market attachment and early experience should give them the capacity to do better in the labour force than certain generations that went before them — so long as the labour market holds up. And that’s the big question.
What’s the political calculus here? The key refrain in any serious political calculation is: “It’s the economy, stupid.” The economic emotions of this year and the next two will be vital in determining whether Prime Minister Anthony Albanese has an easy run in the 2025 election. The most recent budget didn’t change Labor’s polling numbers, as voters got cost-of-living relief but absorbed the reality of how limited it would be. More so than the budget will be the reality on the ground.
Labour market deteriorations generally hit young people hardest, because they are not yet vital to their employers. Gen Z is likely to suffer the most as the unemployment rate rises to 4.5% over the next couple of years. Youth unemployment is regularly double the national rate. The old narrative of the Liberals being better economic managers could well enjoy a resurgence among this group — despite its extremely dubious foundations — and undermine a key demographic that voted for Labor at the last election.
It’s unlikely any swing to the Coalition would be enough to change the government, given its dire shortage of seats — indeed, the so-called sophomore effect, where new MPs improve their name recognition and do better in their second election, could give Labor a boost.
But things could get a lot tighter.
What? The people who are suffering the most are the poor. It doesn’t matter what generation you are. That’s irrelevant. Money cushions all economic pain, and the more you have, the less you lose.
agree completely – maybe some reporting with women who get 7 bucks for each teenaged she supports – whilst being gaslit and told at 45 csnt retrain or upskill or share a house rent cause all the media ageist obsessed banner headlines reaching economic conclusions based on data which might not tell the whole story – anywho whay exactly is ” doing better mean after 20 plus years and hopefully having built some social economic capital and leaving your kids a little egg – Crikey can we have some socially aware seasoned women journalists too – beards and tokenism feeding the untouchables on the neo right press neardo Fordam freakfest – dog whistles and opinion feeding division and look how we treated an ild woman tazered by a 36 yo man in a privatised hell hole
sic old woman sitting down alone in a kitchen btw
One approach is to look at who is not.
Research by the Australia Institute has concluded rural and regional communities will receive the least benefit from the Stage Three tax giveaways, given their comparatively lower earnings. As morrison intended, of course.
Tasmania’s Senator Lambie, whose vote gave the Coalition the support it needed to pass the tax package in 2019 but has since called for Stage Three’s scrapping given the change in economic circumstances. “It’s arse about face, giving money to people like me who don’t need it and giving nothing to the people who are screaming for assistance,” she said.
Tasmanian electorates of Lyons, Braddon and Bass are least likely to benefit from the tax “reforms”, with just $130m. Franklin in outer metro Tasmania is in the bottom 10. Taxpayers in the top 5 electorates will pay less tax due to stage three than the bottom 20 electorates combined.
But the Stage Three giveaways were always an evil idea, covid regardless. Lambie has repeatedly proved to be the “useful idiot” that every reactionary government wants.
You go too far calling Lambie a ‘useful idiot’. She is one of the better senators. Her judgement can be wrong and she makes mistakes, but she still does a better job than most at weighing up what the government of the day is doing and deciding how to respond, particularly when you take into account the resources she is working with. Even more remarkable in our politicis, she is capable, in time, of recognising and admitting her mistakes. She learns from experience, which is not typical of any idiot. If you want to find some real idiots, useful or otherwise, you should begin with Labor and its full-throttle support for the worst of the last government’s policies, including not only the Stage Three cuts but AUKUS and much more.
Agree – better a human being or, failing that, a politician admitting to error and then working to correct it.
How soon can expect to hear mea/nostra culpas from ‘Labor’ over the Stage3 Tax splash?
Never explain, never apologise seems to be the M.O. so what chance of it scrapping USUKA, the world’s most expensive suicide note and seeking forgiveness?
Just ruining Marles’ post-politics career plan should be sufficient incentive.
hah hah
She must work out her stance on every bit of legislation (helped by her staff) whereas the average backbencher just has to vote as he/she is told.
yes she is better but wow the bar is sooo loooow
yep as much as i love the tough real talk fest im so relieved to have Max from the Greens and fab independent women and men – the embarrassing lightweight women on lastABC Q& A …. golly….. scary – the woman in the audience who knew economics and articulated the scam going on at the RBA – thsnks to the neo lib benefactoring reps for same old BS POLICY
This comment is not clear! Much of it does not make sense. What are you really trying to say???
With luck, the worst hit will be the main political parties who scammied it up and are going to promulgate it. We’re going over the cliff of climate disaster, the rich are getting richer and the poor poorer. And you assume people are going to vote for these expensive failures for evermore? The Liberal party, the Labor party and the National party are all scoundrels and thieves, stealing the future. Come to think of it, they’re very like the coal, oil and gas industries: to hell with everything except themselves. You know… it’s true.
i feel ya pain – cant sleep – like the dude in Potlandia screaming on my bike at random bogon motorists
Sic Portlandia – Fred Armisen’s angry holey ear bicycle rider
The indexing of HECS (or whatever it is called now) will also be hurting Gen Z – I’ve seen a few social media posts and a petition about it recently.
and older female grads too
– you know the libs upoed humanities – biggest concentration of marginalised cohorts did do those courses – simply legal scams and stupid too
One would not be so pessimistic about the prospects of Gen Z for three reasons inc. stretched demographics, baby boomer bubble & how we count our population.
Longevity has meant oldies and then baby boomer bubble, not just holding much wealth, but are holding homes/assets and staying in data longer, the baby boomer bubble is about half way in transition to retirement (‘big die off’ to start in few years) and is the Gen Z data diluted by overseas students, caught in NOM net overseas migration, which is then used to derive the estimated resident population?