The Household, Income and Labour Dynamics in Australia (Hilda) survey released each year is an excellent way to map how Australia is changing, and what makes us tick.
The survey released on Wednesday shows that inequality improved slightly in 2012, and Australia’s dependency upon welfare also remains well below the levels of 10-15 years ago. But, while median and average incomes continued in 2012 to grow, the survey also shows that the poverty rates for most household types remain above the low levels achieved prior to the GFC.
The latest annual Hilda survey contains findings up to 2012, so to a large extent it is a historical document rather than one that paints a picture of how things are now. But nevertheless, it does provide a very good depiction of the changes of Australian life this century.
While the survey does contain numerous social aspects, economic factors always take centre-stage.
The survey found that in 2012 the average equivalised household disposable income for a single person was $48,935, and the median was $43,210:
Thus, for a family of two adults and two children in 2012 to be on the average income, they would have needed a household disposable income of $102,735, while an income of $90,741 would see the same-sized household right on the median level of income.
The survey found that during the mining boom, average incomes on the whole grew faster than median incomes, but that in 2009, during the GFC, the reverse occurred:
The GFC hit higher income earners on average harder than those on low to middle incomes due to aspects such as the collapse of the share market. But since 2009, average incomes have risen by more than median incomes.
As a general rule, when average incomes grow faster than median ones, inequality is increasing, as average incomes are affected more by increases of the highest incomes. Thus in 2009, the Gini coefficient measure of inequality fell, before rising again in 2010 and 2011, and then falling in 2012.
The long-term look at inequality, which uses a five-year sum of disposable incomes, shows that the mining boom did slightly increase inequality, but that it has fallen in the past five years.
However, it is worth noting that the 2012 long-term figure includes that 2009 abnormality of income growth, and that also since 2012 the cost of living for lower income earners has risen by much more than those employed:
The low interest rates – and thus lower mortgage payments compared with rent increases – has seen the standard of living over the past three years, which are yet to be counted in the Hilda survey, improve more for wealthier homeowners than the poorer households.
The survey also shows that while the gap between the rich in the 90th percentile of income and median income households closed slightly from 2000 to 2012, the gap between the median households and those in the 10th percentile has increased:
So the rich and the median households look to be doing OK, but the poorest are in danger of being left behind.
The long-term poverty rates also bear this out. While the percentage of households that could afford a basic set basket of goods has fallen, the proportion of households earning less than 50% of the median income grew during the GFC and since:
As the long-term figures include the GFC years, the annual figures perhaps show a better picture – and indeed they do show a significant decline in poverty across households from 2009 to 2012:
But again, the figures are somewhat out of date and do not take into account changes in the welfare entitlements since then. For example, while the percentage of lone parents in poverty declined in 2012, the changes to the single parent allowance, which saw many parents forced from the parenting payment onto the lower Newstart, only occurred in 2013.
And when we look at welfare across the board, we discover (yet again) that any suggestions, by politicians or in the media, that welfare dependency in Australia is growing are complete nonsense.
Across all measures, whether it be the percentage of households receiving welfare or dependency of welfare for income, welfare is much less of an issue than it was 15 years ago:
The impact of the GFC and the persistent higher unemployment since then has seen a levelling of dependency, but certainly not great jumps that would demand a war on welfare or a “strong welfare cop”.
The survey has not only looked at changing incomes, but factors that influence them – especially the movement from unemployment to employment.
It has found that having a dependent child is a significant barrier for women on returning to employment, but not at all for men. It has also found that whether or not a woman’s partner was employed made no difference to whether she would return to work, but if a male had a partner who was employed he was more likely to do so.
Childcare of course has been a major issue influencing female employment, and the survey shows that in 2012 childcare issues were growing.
Seventy-three percent of couples with children reported difficulties with child care – whether availability, quality or cost, compared with 66% in 2010:
The survey also found that the persistence of these difficulties over a one- year period was also growing:
Given the major policy work done on childcare by the Abbott government, they would be hoping future Hilda surveys start showing some improvements on this aspect.
And also, rather interestingly, the survey found that people who changed jobs were more likely to have larger wage increases than those who didn’t.
In 2010-11, women who changed jobs had an average wage rise of 8% compared with just 1.7% for those who stayed in the same work:
For men an even greater difference occurred – in 2010-11 those changing jobs had an average wage rise of 10.2% compared with 1.9% for those who didn’t change:
Thus it would appear the way to higher incomes is to be prepared to move. But income is not the be all and end all of life satisfaction.
The Hilda survey found that people were more likely to be satisfied with their life if they lived in small towns of fewer than 1,000 people, even though such areas were likely to have lower incomes.
And when it comes to being satisfied with your married life, the survey found that your partner’s annual income had absolutely no impact. It also found that receiving a major improvement in your financial situation also had no impact on marriage satisfaction.
But money still does play a role. A worsening of financial situation reduced people’s satisfaction with their marriage by about 3% – roughly the same level as if you are a non-smoker and your partner is a smoker.
So perhaps the best advice is don’t bother with changing jobs, stay constant in your work, and definitely quit smoking.
