House prices are now an official excuse to hollow out the economy. From The Age (since Tim left I didn’t know it was still published!):
Home ownership is beyond the reach of an estimated 1.5 million Australians because the growth in house prices has outstripped the rise in minimum wage more than twofold, unions say.
The ACTU will lodge a submission to the Fair Work Commission on Friday calling for a rise in the minimum wage, now at $622.20 per week, or $32,355.44 a year.
While the minimum wage was equivalent to 14 per cent of the mean house price in 1993, it is now at less than 7.5 per cent.
ACTU secretary Dave Oliver said a 250 per cent increase in average house prices in the past 20 years had made it impossible for those earning minimum wages to buy a home.
…A spokesman for Employment Minister Eric Abetz said the government would make a submission to the Fair Work Commission shortly. ”We’ll have more to say about this then,” he said.
I very obviously agree and sympathise with the lowly paid. But, let’s face it, this is also a road to nowhere for the economy too. Our main macroeconomic problem is falling competitiveness in the real exchange rate, which includes wages.
The answer is not to increase wages, it’s to lower house prices.
In the real world, of course, this wage rise will be resisted by the same corporate interests that prosper from the rising house prices, as well as those that get squeezed out by them.
Egalitarianism anyone?
