Incomes up again

Stats NZ reports:

Median weekly income up 4.3%

Median weekly income from all sources was up $26 in the June 2015 quarter from a year ago, Statistics New Zealand said today. Half the population aged 15+ years received more than $621 a week in the June 2015 quarter. 

With inflation running below 1%, that is a very significant boost to median incomes.

If you can keep inflation low, but have reasonable wage and income growth, you can see significant income gains. And if you reduce taxes also, you boost actual disposable incomes even more.

The data above is from the NZ Income Survey that doesn’t go back very far. But Stats NZ has a data series back to 1989 for seasonally adjusted average (not median) weekly earnings.

If you then deduct income tax and ACC levies you get net annual earnings, and adjust for inflation and you get real net income from earnings.

So what was the average real net income from earnings in December 1999 when Labour took office?

  • Gross $29,241
  • Tax $5,702
  • ACC $380
  • Net $23,159
  • Real Net (Q2 2015$) $33,205

And what were incomes six and a half years later under Labour?

  • Gross $36,838
  • Tax $7,183
  • ACC $479
  • Net $29,176
  • Real Net (Q2 2015$) $35,011

So net real incomes went up 5.4% in the first six and a half years of a Labour Government. That’s 0.8% a year.

Now what were incomes when National came in in December 2008?

  • Gross $41,435
  • Tax $8,113
  • ACC $580
  • Net $32,741
  • Real Net (Q2 2015$) $36,651

And as of June 2015:

  • Gross $50,229
  • Tax $8,089
  • ACC $728
  • Net $41,412
  • Real Net (Q2 2015$) $41,412

So over six and a half years of National Government, the average real net earnings are up 13%. That is 2.0% a year.

So the average real net income for a working New Zealand is 13% higher than in 2008. That is a significant achievement.

Now the increase in earnings has little to do with the Government. That is more a function of the labour market. But the Government does set tax rates, and Government policy does impact inflation significantly. The combination of those three has benefited working New Zealanders greatly.

If you take away percentages the average net real earnings are up $4,760 since 2008. That’s an extra $92 a week.

And by comparison they went up only $1,806 in the first six and a half years of Labour.

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