Why mining hits income so hard

From The Australian:

“If you lose a job in mining, or if someone in that space has to trade down to a lower-paid job, then that’s less income for the individual and less purchasing power,” senior ANZ economist Justin Fabo said.

“If that happens on a large scale it all adds up.”

Put simply, it’s not just about the percentage of the Australian workforce employed in the mining sector, it’s the size of their pay packets.

“We’re looking at some substantial job losses [in the mining sector]. Some of those people will leave the country or get jobs elsewhere, so it might not show up massively in the unemployment rate but in terms of a drag on income, we think that will be significant,” Mr Fabo said.

This graphic, Tweeted today by Mr Fabo, shows just how big the wages gap is in terms of full-time average earnings.

wages-mining-growth

Will wages in another sector step up now that mining investment is cooling off?

Historically, a lower Australian dollar would mean the local manufacturing sector would step into the spotlight, but according to Mr Fabo, the Aussie dollar has been too high for too long and most of the industry has fundamentally changed in that time to deal with it.

Yeh, manufacturing, good one!

Comments

  1. Wages in manufacturing and construction (plus many other sectors) were dragged up by the mining sector. We went from paying relatively unskilled 18 year old labourers $25 to $50 per hour at the height of the boom here in the Hunter. We still had kids walking out the door every few weeks for more.

    Funnily enough, we’ve had a few guys asking to come back in the last few months. But they can’t possibly accept less than $100k.

    • Pfft…I’ve had guys tell me they can’t survive on less that$180k. Christ this country needs a shake up.

      Those blokes you’re talking about will soon be back when the savings start to burn or the repo man shows up. Just a matter of time.

      Hey, how much does a repo man earn? That could be quite enjoyable.

  2. This is why the reality force field in Sydney is so strong – no mining jobs – just bull markets in
    debt and equity maate

    QLD and WA are losing real well paid jobs that have been sustaining big lifestyles/mortgages

    Keep watching the office vacancy rates. The mining industry is bringing down engineering, legal and brokerage fees at pace

    Another 25bps isn’t going to anything

    ohh goody darling. – the minimum nut on the VISA card dropped from $980 to $954 – what does your eBay hobby pay again?

    Private school enrolments are going to be a big tell on the health of these markets. $15k a year for grade one crayons going to be a tough call for a lot of Range Rover lessees

    • “brokerage fees”

      They haven’t made money since the GFC, at least not traditional equity brokers. That model is dead.

      • Spot on

        Check out Bells’ recent annual report

        The Chairman was upbeat saying that they had made $6m for the year using the same model that made them $60m in 2007 !

        At least Bell Direct made $300K off $8m of revenue…. if Bell Direct was a broker at a desk he’d be getting death stares.

    • There’s plenty of mining in Sydney, and there’s plenty in the Hunter.

      Many people live 5 days up there and then drive 3 hours south for the weekend in Sydney.

  3. How much delay is there on the loss of some of Australia’s highest paying jobs – jobs that have been pulling up average earnings for the past decade – flowing into wages data?