Average weekly earnings power on

The ABS has released its Feb quarter Average Weekly Earnings (AWOTE) report today and it shows ongoing solid wage rises across the nation. Better than the market was forecasting too with QoQ growth of 1.1% versus expectations of 1% and YoY growth of 4.4% versus 4.1% expected.

Here’s the long term chart:

That’s still very respectable wage growth and not suggestive at all of a struggling labour market, so this is one for the bulls.

Indeed, the release also contradicted yesterday’s Labour Price release, given it showed WA eased and everywhere else did just fine:

Yesterday’s mining boom was delivering for all.

Houses and Holes
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Comments

  1. H&H – the ABS has delivered two seemingly conflicting reports about the state of general income growth just one day apart.

    I don’t have much knowledge here, but doesn’t that suggest that the two indexes are measuring somewhat different things?

      • Well would you care to elaborate – since it seems to be showing that average weekly earnings have been increasing faster than wages actually being earned.

        I take it yesterday’s data is a measurement of the rate of change in wages and salaries that employers are paying? How is it that there can be a significant difference – and is it real or statistical?

        Perhaps the accelleration in mining sector wages over the quarter – while everyone else decellerated – has pulled up the average? Perhaps we all own investment proeprties that we rent out for a positive rate of return?

        Seriously, every time average weekly earnings figures are trotted out, I go “WTF?” Whichever I turn, they just don’t seem to match the anecdotes I see on the ground (mining excepted).

        • Lef-tee There are a lot of people earning wages that I consider high, and they are not necessarily highly skilled.

          • Yep, and I know a few of them Peter (living up here in resourceville).

            I’m just wondering out loud how average weekly earnings can seemingly grow faster than average wage and salary growth.

            We have two sets of data delivered by the same national data institution a mere 24 hours apart, seemingly showing opposing results – so do we suddenly just disregard yesterday’s data if today’s data sits more comfortably with our ideological position?

            If we assume yesterday’s data to be correct, then it seems likely that today’s data is derived by measuring something else other than just what employers are paying theri workers, no?

            Non-mining sector wages cannot be both decellerating and yet growing robustly in the same period of time.

          • Well it won’t be IP’s as you suggested earlier, they are negatively geared.

            It is puzzling I know. I wish that I had an answer for you.

          • I’m just wondering out loud how average weekly earnings can seemingly grow faster than average wage and salary growth.

            As I’ve maintained, wage share as part of the economy is continuing to diminish.

            A higher percentage of earnings is coming from dividends and capital gain events.

            We are rewarding more and more those that do not work, and rewarding less and less those that do.

          • “As I’ve maintained, wage share as part of the economy is continuing to diminish.”

            Yep, I’ve seen that one graphed RP – it’s not pretty.

            I think what we need to do is find out how AWOTE are calculated – clearly it isn’t just a measure of wages and salaries being earned.

            Which makes it less useful as a benchmark for reality, since wages and salaries are all that the majority of people actually derive weekly income from.

        • I take it that figure is pre-tax? Otherwise, the implication that it is fairly difficult in Australia to earn less than a grand a week free and clear sounds more than a little suspect to me.

          Average incomes growing faster than most peoples wages suggests that most average John/Jane Doe workers have an additional disposable income stream with is both regular and significant.

          To which I say: bollocks.

        • I am also having a negative gut reaction to the over the top reports of strong wage growth.

          Perhaps the answer lay in the methodology. In the same way as participation rate reduction can have a positive impact on UNemployment figures perhaps lower paid workers dropping out becoming unemployed or / and non-participients will impact total wages.

          A lot of shonky statistics kicking around as they just don’t fit into the puzzle.

  2. Labour market statistics in Australia are becoming less and less relevant. Unemployment in Japan for March 2012 was 4.5%. Are we to assume from this one number that the economy there is in rude health ? Obviously not. As the population in Australia ages and the upper end leave the workforce, the unemployment rate must remain low even as people lose their jobs. The delta on these remaining people to eke out wage growth just doesn’t seem large enough to alter demand in aggregate. I am sure someone with a better statistical understanding of the numbers can express this view more eloquently than I can but the mainstream media doesn’t seem to have even got halfway to understanding the basic maths yet.

    • Yes, we know that Japan’s unemployment figures are misleading. We also know that income growth in Japan has been flat or falling (quite the opposite for Australia). However, during Japan’s golden age, we would probably have seen income growth in Japan greater than what we are seeing in Australia.

    • The GDP growth obsessives forget that while Japan may have experienced low GDP growth over the last 20 years they have hardly been lost decades and the standard of living of most Japanese remains very impressive.

      At last count they still seem to be whipping our tails at producing world class equipment ranging from retail, scientific to industrial.

      Sure they have a bigger population but it is about time we stopped relying on that excuse for our inability to build anything much that is world class and that people want to buy.

      Thanks goodness we can drive big diggers and grow stuff.

      But time is running out for us to learn to save and invest rather than consume and borrow.

  3. constant gardener

    how are average hourly wages calculated? If they are from positions that are paid by the hour (part time?) then the trend of moving full-time roles to part time roles for skilled work (higher rates) could perhaps bring up statistical results like this.

    So: higher hourly rates but lower total wages (both salaries and hourly)

    • constant gardener

      oops… just realised its weekly earnings.. I had a mindset the post discussed hourly earnings.. doh!

  4. From this we can garner that people must be making more money from something other than wages, perhaps the stock market, fx, and property.

      • I’ve been taking notice of the AWOTE figures for the past few years and have always been incredulous – they seem to suggest typical wage earnings significantly in advance of what I see on the ground in the non-mining sector.

        I think Adz probably has it – the index assumes that your typical wage earner derives a regular, disposable income stream from additional source/s.

        While there are no shortage of people who do, I think that it’s far from typical, which makes the index misleading.

  5. I would like to see some data on Median weekly earnings as opposed to the average, the anecdotal evidence says to me that the Fly in/Fly out miners who live in the eastern states could be driving the averages higher.

    Once you actually look at the median invidual income instead of the average it goes from being quite impressive to laughably low once you factor in taxes and the enormous cost of housing in this country.

    • With the correction in iron coal and other dirt well underway any mining driven wage growth is on borrowed time.

      But in reality I don’t think there are enough miners to have such an impact on the average. Unless they were getting
      30% wage growth.

      Anyway soon many will be just fly out miners

  6. Jumping jack flash

    Doesn’t matter what the wages are, most of it goes to the bank, to head overseas to pay the mortgage bill.

    The rest flows across the ocean to pay for the imported trinkets we buy.

    On the way through it makes the wheels of our service economy spin around a bit.

    Even if wages doubled, most would simply run to the bank to leverage it up to buy another house, or buy some more imported trinkets.

    The whole thing is broken.

    It’s like trying to bail out a sinking iron ore transport ship with a sieve.