Incomes 2001 – 2006
Jordan highlights some census data showing how incomes have risen between the 2001 and 2006 censuses with the median income up 32%.
Now of course gross incomes have actually risen. There has been a reasonable level of economic growth.
But first of all one should note (which Jordan did do) that some of this is inflation, which was 13% over that period. So the real increase over five years was 16.8% or 3.4% a year. So in real terms median income went from $18,500 to $21,600 or a $3,100 increase.
Now out of interest what happened to personal income tax over that time? Oh it increased by 42.3% or $7.2 billion (total direct taxation went up 54%). Anyway personal taxation alone on average (and yes median is different but no data for that) went up by $2,300 per adult. Now that does not take account of inflation’s effect on taxation but likewise I have also not covered the fact people have been spending more than they earn, which would counter that somewhat
So yes incomes have gone up. That happens when you have economic growth. But both inflation and taxes have eaten up a reasonable chunk of that increase, so that the net real increase in income is not that huge for a five year period.
June 22nd, 2007 at 1:08 am
DPF,
Also need to factor in the growth in consumer debt as this also impacts disposable income, perhaps now in a spectacular fashion.
Growing incomes is fine so long at cost of living doesn’t grow at the same/greater rate. Without having the data I suspect consumer debt/mortgages is having a massive impact on many, many NZ families.
June 22nd, 2007 at 8:50 am
Gotta love that bracket creep. 0_o
June 22nd, 2007 at 9:41 am
And we need to look at the winners and losers too.
There will be certain groups who will have done rather nicely.
Some groups, like IT workers, I guess will have enjoyed payrises, well above inflation and other groups.
Others will have seen their payrates stagnant.
Personally, as a journalist, my full-time pay only rose ten percent between 1999 and last year, so actually I am worse off.
Freelance rates have barely changed at all.
Then we need to look at the cost of living.
Housing costs have rocketed, with many younger people now priced out of the market. So the old and the rich, who own property, will have gained at the expense of their children and grandchildren.
There are lies, damned lies and statistics, and Jordan may spin them how he wants.
But there will be many on this blog who will feel significantly worse off than 7 or so years ago. I know I do.
We also need to ask, could new Zealand have done better?
We have had the best global circumstances in a generation.
To me living standards here seem stagnant, while Australia races ahead, and the UK hums along nicely though it too is feeling the burden of Gordon Brown’s high taxes.
If there is growing prosperity in New Zealand, I just don’t see it, never mind share in it.
And I’m sure I’m not alone in this.
June 22nd, 2007 at 9:43 am
And we need to look at the winners and losers too.
There will be certain groups who will have done rather nicely.
Some groups, like IT workers, I guess will have enjoyed payrises, well above inflation and other groups.
Others will have seen their payrates stagnant.
Personally, as a journalist, my full-time pay only rose ten percent between 1999 and last year, so actually I am worse off.
Freelance rates have barely changed at all.
Then we need to look at the cost of living.
Housing costs have rocketed, with many younger people now priced out of the market. So the old and the rich, who own property, will have gained at the expense of their children and grandchildren.
There are lies, damned lies and statistics, and Jordan may spin them how he wants.
But there will be many on this blog who will feel significantly worse off than 7 or so years ago. I know I do.
We also need to ask, could new Zealand have done better?
We have had the best global circumstances in a generation.
To me living standards here seem stagnant, while Australia races ahead, and the UK hums along nicely though it too is feeling the burden of Gordon Brown’s high taxes.
If there is growing prosperity in New Zealand, I just don’t see it, never mind share in it.
And I’m sure I’m not alone in this.
June 22nd, 2007 at 10:12 am
You’re not taking account of new large tax credits…(WfF) that’s got to be factored in to the net income of the average person.
June 22nd, 2007 at 10:21 am
Darren, why don’t you and some of your other workmates join the union and fight for a better pay increase? When you’re working in an industry with such low union density it’s not surprising your pay increases have been so low.
June 22nd, 2007 at 11:03 am
DarrenG -
If you and your collegues are not being paid enough, don’t be a pussy and take it, stand up for yourselves. Why should your bosses get total control on what you are paid?
Its a market place, right, it should be that both the supplier and demnder have influence on the price. But you alone are just one person, you cannot influence the price of your labour, the bosses have all the power and you have to take what you are given. But if you join your union its not just you its everyone else standing beside you when you make your demands. And, together, you can balance out the bosses power, make a market of equals, and get the pay you deserve.
June 22nd, 2007 at 11:54 am
Or, you could leave, start up your own business, risk your own capital, put the family home on the line and pay yourself whatever you want…
June 22nd, 2007 at 12:01 pm
Yup – he could do that too.
June 22nd, 2007 at 1:38 pm
Is this Kiwiblog or the on line meeting of shop stewards trying to save brother Darren?. Being self employed I would have to agree with Darren when he says, “If there is growing prosperity in New Zealand, I just don’t see it”. The government that people like Sam and Tane so adore have being riding a world wide prosperity wave but NZ has stood still. Your form of government, Sam and Tane, has proved time and time again to be a sick joke. In these days of “full” employment someone like Darren, if he is any good, should have no problem in finding a better paying job. I believe CraigM holds the real answer to your woes Darren but you will have to trust in yourself.
June 22nd, 2007 at 1:48 pm
DPF -
“So yes incomes have gone up. That happens when you have economic growth.”
Not necessarily true. There was net growth between 1980 and 1990, but real wages fell 6%.
Again, there is a labour market, supply and demand within the reuglaorly framework is what deterines the price of labour, which is not automaitcally tied to the borader economy.
Real average wage growth will only happen when a) more people have more work (from rising demand) and they have the power (through scarcity from low employment, collective action etc) to demand more pay for their work.
June 22nd, 2007 at 2:38 pm
Sam,
The example you give above does not necessarily apply to manufacturing, for example. If the costs of business get too high (company’s own decision) in NZ, then they just go overseas. Result, no paycheck, let alone a higher one.
In reverse, your synopsis can apply to highly skilled/specialist jobs. Those jobs require appropriately skilled people and they do get paid well.
Where does the majority of NZ’s labour force lie?
Add in rising interest rates, high dollar, international competition and some employers just cannot pay more. NZ’s economy does not live in isolation. We are an export/import based economy and overseas prices and competition have a lot to do with costs to a business. I am sure most employers would like to pay their staff more, but not at the expense of their own income, or the viability of their company.
I believe that workers should share in the prosperity of a company, but also understand the reality if the compnay is struggling.
I also maintain that the one who puts up the money and takes the risks should get the biggest reward.
June 22nd, 2007 at 2:49 pm
After tax profits for companies have risen an average of 20% over the past 5 years (higher than the 1990s, incidentally).
Obviously, there are problems at any extreme – too high wages could sens a company under or tempt it off-shore, more relevant with highly portable jobs than DarrenG’s job as a journalist.
June 22nd, 2007 at 4:10 pm
I wonder if Jordan could do similar research on how much rates have risen over the same period.
June 22nd, 2007 at 4:51 pm
“So yes incomes have gone up. That happens when you have economic growth.”
Not when National was in power during the 1990s it didn’t.
This is cited from No Right Turn
http://norightturn.blogspot.com/2004/04/statistics-whig-takes-issue-with-my.html
“New Zealand’s gini coefficient (a common statistical measure of income inequality) rose significantly between 1986 and 1996, indicating greater inequality. This happened no matter how you slice it, whether you look at individuals or households, market, gross or disposable income.
Over the same period, the percentage of total income going to the top three deciles of income earners rose while everybody else’s fell or stayed stagnant (Figs 2.15, 3.16, 3.17).”
Cheers
June 23rd, 2007 at 1:35 pm
PJ
When wages have been held down for a long period of time as they will always be under collective bargaining then when regulations are removed the supply and demand economics of wages will go back to the natural order. That being all workers won’t be constrained by meager CPI increases as so often gained under a collective agreement. In demand workers will be “allowed” to get increases of greater amounts than workers with skills that are not in demand. A job is not a birth right, it’s something that you supply skills for and get paid for doing. Not all workers are the same and there is no such thing as a homogeneous labour force, why would you even try and pretend it is because of an ideology.
If public service collective agreements gained the members the same increase every year as the MP’s then I would agree the concept works. But they never do. One group of public servants has had 7%-9% every year for the last 8 years and the rest get 2%-3%. If the Unions had any balls at all, if they had an integrity and real concern for the workers they simply wouldn’t accept anything less than the MP’s.
IMHO Collective bargaining is holding the wages in NZ down.