Two speed wages

The Australian Bureau of Statistics (ABS) has just released the Average Weekly Earnings (AWE) data for the November quarter.A breakdown of the key changes is below:

According to the ABS, on a seasonally adjusted basis, national total AWE increased by 0.8% in the November quarter, to be 3.7% higher year-on-year. Full-time total earnings increased by 0.8% over the quarter and by 4.3% over the year.

A time series of annual average wages is shown below. According to the ABS, the average Australian earned $53,700 per annum as at November, with the average full-time worker earning $72,181:

You can see from the above chart that males earn significantly more on average than females. As at November 2011, full-time male earners earned 26% more on average than females full-time workers, whereas total male average earnings were 54% higher.

The disparity between the private and public sectors is also striking, with public sector workers earning on average 22% more than private sector workers, and public sector full-time workers earning 8% more:

In real (inflation-adjusted) terms, you can see that total average annual earnings have flatlined since May 2010, growing by only $470 (0.9%) over the period. With almost all of that growth (0.8%) occuring in the latest quarter:

At the state level, wages growth has been mixed, with Northern Territory (+3.5%), Victoria (+2.3%) and South Australia (+2.2%) recording strong growth over the quarter and New South Wales (-0.7%) and ACT (-0.5%) recording negative growth.

Over the year, however, Western Australia (+11.2%) and Northern Territory (+10.6%) were the standout performers, whereas New South Wales (+2.0%) and Queenslands (+2.0%) were lagards:

In dollar terms, workers in the ACT, Western Australia, and Northern Territory get paid the most on average, whereas those in Tasmania, South Australia, and Victoria are paid the least:

Along with yesterday’s release of the labour price index for December, which showed solid wages growth, we see nothing in this release to alter the RBA’s mind on monetary policy staying on hold.

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  1. I have no idea where the males that only earn $53,700 are – everyone employed full time that I talk to are on $70,000 plus, well at least $65,000 and often well over $100,000.

    Some of the ABS income stats used by so many to determine affordability would be what doctors call idiopathic.

    • According to the ABS, the average Australian earned $53,700 per annum as at November, with the average full-time worker earner earning $72,181.

      Not sure what you’re saying then Peter – Leith spelled it out quite clearly. It seems the stats agree with your anecdotes.

      Further, in your line of business, most mortgage borrowers, by default, would be on minimum average wages.

      • I have changed that sentence and removed the word “earner”, which was a typo.

        But Prince is correct. The $53,700 figure is the average of all kinds of work, be it full-time, part-time or casual. That’s why it is so low. The average full-time wage was $72,181 as at November 2011, with the average male full-time wage even higher at $78,114.

    • How many retail and transport workers do you talk to Peter? (remembering that retail is one of our biggest employers by sector)

      My anecdotes are the opposite of yours.

      “The disparity between the private and public sectors is also striking, with public sector workers earning on average 22% more than private sector workers”

      I think the explanation for this is not difficult. The public sector heavily employs professional people with higher education – teachers, doctors etc – while the pivate sector employs large numbers of people in “burger-flipping” roles.

      • I’m with Lef-tee. I reckon the average gets a big boost from those at the top of the tree. After talking to my accountant (and I do not live in a poor socio-economic area) he reckons the number of people earning $100k plus is vastly over stated in commentary and the media. His view was that if you are on $85k plus, you are a higher earner than most by a fair margin, and he reckons the average sits somewhere closer to the high fifties/low sixties.

        • If you want a truer reflection of what the everyday “Joe” earns, you would need to look at the median wage, which is not pulled-up by higher earners. By memory, the median is around 15% lower than the average.

          • My view does get skewed because anyone working part time and only earning $400 per week just doesn’t look to buy a house or borrow for investments etc, so I rarely see that group of workers except when one is a marital partner of a higher income earner, so they still have a very reasonable combined income.

            As an example in the last couple of weeks I have spoken to two young women who both earn about $200,000 pa and I’m just blown away by that. Neither have anything to do with mining.

            There are plenty of guys on $200,000 or more and good luck to them, but there must be a social cost for the imbalance when some guy working as an office clerk on $50,000 with a wife working part time on $30,000 try to compete with couples earning a combined income of $300,000 plus.

            The difference between the low end and the high end seems to have been amplified in recent years.

      • Yep lef-tee retail workers are not well paid, but I wouldn’t see many truck drivers on less than $65,000 – local not interstate – they get more.

        But train drivers or guards get $90,000 plus and way over $100,000 in QR is not uncommon.

        Teachers, Police and Nurses get $70,000 plus.

        Get yourself a riggers certificate and double your income….

        I agree there is a huge disparity between what I would intuitively consider similar skill based jobs.

        Does that the $53,700 include social security beneficiaries, not just part time employees, and perhaps retirees?

        • Pete. The ABS definitions are here. Here are some key quotes:

          Average weekly cash earnings represents average gross (before tax) earnings of employees, inclusive of salary sacrifice….

          Average weekly earnings statistics represent average gross (before tax) earnings of employees and do not relate to average award rates nor to the earnings of the ‘average person’…

          Employees refer to all wage and salary earners… who received pay for any part of the reference period…

          Weekly ordinary time earnings refers to one week’s earnings of employees for the reference period, attributable to award, standard or agreed hours of work. It is calculated before taxation and any other deductions (e.g. superannuation, board and lodging) have been made. Included in ordinary time earnings are award, workplace and enterprise bargaining payments, and other agreed base rates of pay, over-award and over-agreed payments, penalty payments, shift and other allowances; commissions and retainers; bonuses and similar payments related to the reference period; payments under incentive or piecework; payments under profit sharing schemes normally paid each pay period; payment for leave taken during the reference period; all workers’ compensation payments made through the payroll; and salary payments made to directors. Excluded are amounts salary sacrificed, non-cash components of salary packages, overtime payments, retrospective pay, pay in advance, leave loadings, severance, termination and redundancy payments, and other payments not related to the reference period.

          Weekly total earnings of employees is equal to weekly ordinary time earnings plus weekly overtime earnings.

          • Yes Leith I have no issues with what you have said, you can only discuss the ABS figures, but what is the data collection methodology?

            Also a lot more people these days are technically self employed as they work as contractors.

            That allows those ’employees” to claim motor vehicle costs including depreciation, internet costs, telephone costs, insurance costs, and SMSF contributions etc.

            Taxable Income is not necessarily the real income for those people, so is there any allowance made for that?

        • From my relatives who are teachers the starting wage is only of the order of 45-50k with a pretty flat progression above that. maybe head of department are on 70k but not most rank and file.

          • Jumping jack flash

            A few years ago 58K was the salary for a secondary school department head teacher. The rest would have been on a bit less than that.

            There’s been a couple of industrial disputes since then though, so it may be a little higher now.

    • I work in a small business of 5 in Melbourne revolving around IT technical services. All 5 of us work full-time, yet not one of us earns more than 50k and pay rises happen…well…practically never.

      So yeah, my experience is quite the opposite from yours Peter.

    • Well, I guess you aren’t spending your time talking to the large portion of society that earns less than your clients and friends.

    • Jumping jack flash

      Hi Peter, good to see you’re comfortable in your ivory tower there. I took a 50% pay cut this year because I was fed up with being an unproductive and highly paid paper pusher, sitting in meetings all day. Now I am one of those who earn 53K a year.

      The sense of achievement is amazing though. I am helping make this country great through the manufacture and export of Australian made goods to the world rather than being a leech on productive activity like so many of those who are paid 70K+.

      • Jumping jack flash

        FYI, I am employed as a mechanics labourer while I study engineering, earning about $20 an hour + overtime rates on weekends.

        I still think I am overpaid for what I actually do, and I can see exactly why it is that Australia is being eaten in the global market.

        My job is probably “worth” about $8 an hour, if that, considering my contribution to productive activities on site.

  2. Thanks for your anecdotes everyone. This thing has been a bugbear of mine for some time. My experience has been that the offical “average” wage is significantly overstated, probably for some combination of statistical reasons.

    In fact, I seem to recall that you argued something such on your original blog Leith?

    My experience also matches the comments made regarding the pay of teachers – the majority of whom are “public servants”. I don’t belive that I know the sort of money that they are earning here in QLD at least – I KNOW I know what they are earning. The highest level of pay possible after years of experience isn’t dramatically higher the the “average full time worker” and many earn less. So many of the people who are preparing our children to go out into the world are “below average” income earners by the offical measures.

    I’ve said it before many times: this is a case where the offical figures bear little or no relation ship to the actual reality on the ground.

    • I earn $65k pa gross and I have friends and aquaintances who earn a lot more, but I also have plenty of colleagues who earn much less, ie. the agency temps we use gross about $45k pa for a full time job, and quite a few them have been “temping” for several years on that sort of money. It’s one of the reasons the housing bubble has been so obvious to me for so long, the current prices are a huge stretch, or completely out of reach for most of us.
      I think there is a tendancy for people of similar income levels to socialise together which can lead them, especially if they are on high incomes, to think what they earn is typical and are unable to understand that a huge percentage of the population really do only earn $40-$60k per year.

    • “…So many of the people who are preparing our children to go out into the world are “below average” income earners by the offical measures.”

      The unfortunate thing is that too many are also below average in the teaching skills department.

      There are excellent teachers but there are at least as many that are not. If we are honest, we look back on our education and know that of all those that ‘taught’ us, only a handful were really good.

      As for teacher salaries, neighbour’s wife, kindy (4yr) teacher, 12 years experience, $73K. Laughs when talking about her job, money for jam. Sweet little kids, generous holidays, good super, happy with her salary. WA gov recently announced goal for teachers to eventually receive salaries (after experience) around $100k. Seems OK – job for life, not too much stress.

      • “The unfortunate thing is that too many are also below average in the teaching skills department.
        There are excellent teachers but there are at least as many that are not.”

        You know this to be true…….or you believe it to be true?

        Unless you know more teachers than your neigbours wife, then I know approximately a hundred times as many. Anyone who thinks it is a low-stress occupation is displaying their ignorance of the situation.

        • Lol. I both know and believe it to be true – based on experience: I went to school, I now have a child in school.

          I would suggest knowing approximately 100 times more teachers than I offers little more than confirmation bias, on your part.

          • My view was not intended to offend. However, there is little likelihood that teachers escape the dynamics of the Bell Curve any more than any other profession.

            In fact, possibly front loaded considering selection criteria…joking?

  3. That PDF from the ACTU that Cameron has tweeted looks interesting, I’ll read that more thoroughly sometime.

    Looking very briefly, there appears to be the suggestion that very few full-time workers earn much less then a grand a week, which is apparently around the average for the lowest paid in the country. This is ludicrously out of step with the actual reality I’m seeing on the ground.

    But then the document notes that the figures are derived from the ABS. I would have thought that the ACTU would be able to garner more in-depth knowledge from “the coalface”.