Typical Aussie household no better-off than 2009

By Leith van Onselen

The 2017 Household Income and Labour Dynamics in Australia (HILDA) survey has been released, which follows the lives of more than 17,000 Australians each year.

A key finding from this year’s report is that real median household disposable income was lower in 2015 ($76,225) than in 2009 ($77,441):

The HILDA survey also provides equivalised income, which measures material living standards by adjusting household disposable income for the household’s ‘needs’. This too declined from $46,762 in 2009 to $46,007 in 2015:

While somewhat shocking, these results should not come as a surprise. We already knew that real per capita wages & salaries have fallen by around 2% in the decade to March 2017:

With worker’s share of national income falling to half-century lows:

Meanwhile, separate data from HILDA shows that differences in average wealth by age have grown since 2002. For example, in 2002, median net wealth of those aged 65 and over was 2.8 times that of people aged 25 to 34. In 2014, this ratio had increased to 4.5:

And this has been driven by the combination of collapsing home ownership among younger cohorts (while remaining steady or increasing for older cohorts) and surging property values:

All of which paints a rather depressing picture and bolsters the case for Labor’s inequality agenda.

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Comments

  1. Yep, ALP are on a winner. The elite, in their ivory towers, can sling BS all they please, the peasants below know what’s what. They’re finding it harder to pay those bills, harder to put a roof over their heads, harder to see a brighter future.

    Also, all this ‘wonderful’ employment data they keep spruiking on about, one wonders when it is going to have a noticeable impact on wages…doesn’t matter either way, it’d need to be double digit YoY wage growth just to keep pace with debt.

  2. true ……….. but why does it take this sort of report to come out before there is understanding of what should be bloody obvious if one opens one’s eyes. The really depressing part of it is that this has happened while the population sleep walks into economic slavery

  3. 2009 was, of course, the peak at the end of a huge boom. Compare to any other year before or after and living standards are up.

    • Good observation. Looking at the graphs a comparison with 2011 would deliver a very different story. A comparison with a decade ago, a vastly different one. Most indicators have improved considerably.

    • How is treading water for a decade a good thing? Inflationary pressure, especially on big ticket items like housing, has far outstripped wages. As far as the average Australian is concerned, all that much vaunted YoY GDP growth has equated to what exactly?

      If 2009 was the high water mark, than we are no better off now than in 2009, hence the Lost Decade quip.

      PS we are completely ignoring the obscene debt that has been piled on during this same intervening period of stagnant wage growth and the overwhelming crush of record immigration.

      • It’s not a decade. Cast your eyes over data from 2006 for decade comparison. Most indicators much improved.

        As Joseph astutely observed 2009 was an outlier at the end of a boom. Generally peaks and troughs are smoothed or ignored.

        We are better off than a decade ago according to the data presented above.

      • Holy dooley, it’s a figure of speech Simone. We have not moved in 8 years.

        “We are better off than a decade ago according to the data presented above.”

        How do you figure that when the costs of living have not plateaued off since 2009 like wages have? Have house prices flatlined over those 8 years?

      • Unconventional Economist, I’m far from a pedant. Horrified to be seen as such. I was simply commenting on the data presented above.

      • 2009 to 2015 is barely more than half a decade, so you are prematurely extrapolating.

        Which isn’t to say that all is rosy in the garden. If the post GFC real wage stagnation continues then we might well end up with a lost decade. Time will tell.

      • @Simone, I will try one last time.

        The conclusion from the above data is:
        – wages have stagnated since 2009

        As pointed out, the costs of living have NOT stagnated.

        If the costs of living have increased, but your wages have not, than you are economically worse off than in 2009.*

        *More so, because the gap between wages and living costs has been bridged by a growing and ongoing debt obligation.

      • @Jo,

        “2009 to 2015 is barely more than half a decade, so you are prematurely extrapolating.”

        It is not premature, as we already have the ABS data up to the present. The report has not utilized current data, for whatever reason, but the conclusion remains the same.

      • I just checked ABS data and obviously in purely $ terms wages have not stagnated. I need to see the data for Real Per Capita but not familiar enough with ABS dataset to locate same quickly. Any pointers much appreciated.

      • We use the term Real Wages. Wages have moved, but barely, and often, even below economy wide inflation. In other words, if wages are keeping perfect pace with CPI, than they are stagnating in real terms.

        The killer is that by far our biggest cost pressure comes from housing, which is not effectively captured by the CPI figure. House prices have been growing at double digits in many areas, while wages have barely been growing at single digits.

      • ….what does it matter if it is the peak of a boom in wages, when the boom in house prices is so far into the stratoshpere that I can barely see it with super human bat vision.

        Stop looking at wages in isolation and you might begin to understand the significance of that tabletop in wages…

      • “essentially are we talking wages growth and lack thereof”

        Precisely. On the whole, wages have barely kept up with inflation.

        Inflation (captured by CPI) – cost of food, fuel, electricity, etc etc etc; basically the cost of everything.

        As a rule of thumb, the cost of everything constantly goes up. To match it, wages must also go up by an equal amount. So wages are also constantly going up. When wages do not go up enough to keep up with inflation, than they are going backwards in real terms, even though they are still technically growing.

        The added problem? House prices are not captured by the CPI. So wages are not pegged against the biggest cost for most families.

        At it’s simplest, if house prices have doubled, than you need to ask, have peoples wages doubled? No? Then the gap has been filled by ever larger amounts of debt (can’t go on forever).

      • Cool. We learn that this is a global trend but not enough to explain Australia’s situation. Broadly:

        Two thirds can be accounted for by

        . Low inflation
        . Decline in terms of trade
        . Increase in unemployment

        One third likely to be

        . Rebalance from period of high wage growth through to mid 2000s
        . Lower real exchange rate (which is still 20% higher than 2006 at time of RBA report)
        . Shift in bargaining power (increased flexibility to market conditions)
        . Unemployment rate may under report spare capacity

        Concludes

        Low wage growth may persist. Speculates if wage growth had now been subdued, unemployment may have been higher further weighing on aggregate demand.

        Doesn’t look to me that any of our political masters have an easy fix, just tinkering at the edges with a big doses of rhetoric.

      • @Simone, a nice sum-up of the situation.

        Indeed, they have both played the game too long. The ALP (my personal bias acknowledged) has some answers in the form of policy surrounding their inequality push, but it will be too little too late, and that’s if they follow through. Simply put, there is no way to maneuver households out from under the catastrophic debt loads they’ve undertaken. We need a correction, hopefully, one in which the rentier class are allowed to fail.

      • Brenton, the lead author of the HILDA report today said that broadly speaking Australia is a more equitable place today than forty years ago. Will this mess with Labor’s inequality drive? I guess a lot will depend on how the media portrays the findings and how prepared they are to dig deep.

      • @Simone, can you link to it, I’d be interested to see what he said.

        Either way, the gist of the study has been to conclude that successive younger generations are falling behind their older cohorts (2001-2015). On home ownership rates alone, there is a growing disparity in economic equality.

        Refer to the below link, specifically the “Home ownership by age group (%)” chart. Note the difference between 2002 and 2014.

        https://theconversation.com/home-ownership-falling-debts-rising-its-looking-grim-for-the-under-40s-81619

        It is these generations that are being most hit by the growing wealth divide, and as such, the target audience of Labor’s inequality push.

      • “Brenton, the lead author of the HILDA report today said that broadly speaking Australia is a more equitable place today than forty years ago”.

        The Gini coefficient for both wealth and income was lower forty years ago than today.

      • Yeah by far the biggest expense for households is “housing” weather it be rent or a mortgage and with astronomical pricing in many cities, that means a bigger loan and much harder times when interest rates creep up, even a small amount for average households.

        Then there is rent going up in Sydney and Melbourne each year which means more of your yearly salary is going out to pay for housing. My rent has jumped from $550 p/week to $625 p/week in 3 years. That’s $3,900 per year more than before. Luckily I’ve had a pay increase larger than that, but I am more exception than the rule if you look at the median wage increase in that time.

        Besides what’s the point of a salary increase if it just goes into the landlords pocket?

        I thought immigration was meant to mean more prosperity for all? And yet here we are stuck in the mud.

    • Not everyone, just the old – there’s some interesting stuff in that HILDA survey:
      The proportion of women aged 22 to 25 living with their parents rose from 28% in 2001 to 48% in 2015 and for men, 42% to 60%.

      • Turning into Italy. Next thing to fall is the fertility rate. Then they’ll just keep immigration juiced and literally replace the population.

        The asset rich have worked out how to keep the plebs under control forever. It’s basically a program of eugenics.

    • Yep. You can blow debt bubbles for a long time. If that measure doesn’t ultimately retrace to the same level of around 2007 (or worse) I’ll be pretty surprised.

    • ABS are dodgy and hiding statistics from the public.They are very aware of the issue and the future.

      I asked them where i could find or provide me with the latest chart for “House price to income and rent to income ratio” kinda like this one from their website ( http://www.whocrashedtheeconomy.com/graphs/housepricetoincomepricetorentratio_australia_sep2012.png ) which was outdated and they told me they dont do those reports anymore because its not necessary.

      I asked why would they stop generating these reports for? Response back i got in an email was to send them my contact details for someone to contact me. (in other words let the ABS kindly but verbally off the record to tell me to piss off).