Worrying signs emerge from new economic mobility report
by Clint Jasper
In short:
Australia's rates of economic mobility rank among the best in the world.
Rising poverty, the gender pay gap and economic conditions faced by those born after 1990 could stymy economic mobility.
What's next?
More data is needed to determine whether those born after 1990 will end up worse off than their parents over their lifetime.
Nearly two-thirds of Australians born between 1972-82 earn more money than their parents did at a similar age, but data shows those born after 1990 are experiencing slower income growth, according the Productivity Commission.
In its latest report into economic mobility in Australia, the Productivity Commission (PC) found Australia's overall levels of economic mobility were high by global standards.
"For most Australians, the amount your parents earned when you were young is not a life sentence," said chair Danielle Wood.
The report, Fairly equal? Economic mobility in Australia, draws on multiple data sets including the Australian Bureau of Statistics and the Household, Income and Labour Dynamics in Australia (HILDA) survey to conclude economic mobility ranks just below Sweden and far above the United States for the majority of the population.
Generational concerns
Those born after 1990 are not on the same income trajectory as the people born in prior years.
A previous PC report found that average disposable incomes grew strongly for all age groups between 2001 and 2008, but then declined only for young Australians (15-34) between 2008 and 2018.
"Weak income growth for people born in the 1990s reflects the poor economic outcomes experienced by younger people following the global financial crisis (GFC)," the report said.
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"Younger Australians experienced stagnant wages and were more likely to obtain jobs with lower educational requirements and earnings potential relative to comparably-skilled younger people in 2001," the report said.
"Which can have long-term negative effects on their wages and occupational choices."
While the PC report stresses more years of data are needed to make better conclusions about lifetime income mobility, it said "the lack of income growth for those born in the 1990s indicates the trend that each generation earned more than the previous may have stalled".
by Clint Jasper
ABC AUS
Posted Yesterday
Posted Yesterday
Danielle Wood says Australia's overall economic mobility ranks among the best in the world.(AAP: Dean Lewins)
In short:
Australia's rates of economic mobility rank among the best in the world.
Rising poverty, the gender pay gap and economic conditions faced by those born after 1990 could stymy economic mobility.
What's next?
More data is needed to determine whether those born after 1990 will end up worse off than their parents over their lifetime.
Nearly two-thirds of Australians born between 1972-82 earn more money than their parents did at a similar age, but data shows those born after 1990 are experiencing slower income growth, according the Productivity Commission.
In its latest report into economic mobility in Australia, the Productivity Commission (PC) found Australia's overall levels of economic mobility were high by global standards.
"For most Australians, the amount your parents earned when you were young is not a life sentence," said chair Danielle Wood.
The report, Fairly equal? Economic mobility in Australia, draws on multiple data sets including the Australian Bureau of Statistics and the Household, Income and Labour Dynamics in Australia (HILDA) survey to conclude economic mobility ranks just below Sweden and far above the United States for the majority of the population.
Generational concerns
Those born after 1990 are not on the same income trajectory as the people born in prior years.
A previous PC report found that average disposable incomes grew strongly for all age groups between 2001 and 2008, but then declined only for young Australians (15-34) between 2008 and 2018.
"Weak income growth for people born in the 1990s reflects the poor economic outcomes experienced by younger people following the global financial crisis (GFC)," the report said.
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"Younger Australians experienced stagnant wages and were more likely to obtain jobs with lower educational requirements and earnings potential relative to comparably-skilled younger people in 2001," the report said.
"Which can have long-term negative effects on their wages and occupational choices."
While the PC report stresses more years of data are needed to make better conclusions about lifetime income mobility, it said "the lack of income growth for those born in the 1990s indicates the trend that each generation earned more than the previous may have stalled".
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Growing poverty
There are some "worrying signs" among the findings.
Poverty levels are the highest they've been since 2001, and have been on a steady rise over that time.
"People most at risk of poverty include those not in paid employment, who come from a migrant background and do not speak English at home, over the age of 65, who rent housing, and in a single person or single parent household," the report said.
It's estimates around 14 per cent of Australians are living in poverty.
"Australians living in poverty (incomes below 50 per cent of the median) face some of the highest barriers to economic mobility," the report said.
"One in 10 Australians experience persistent poverty, and where people live matters a great deal to their ability to escape poverty."
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Education levels were found to be highly correlated with economic mobility.
Those who completed a Bachelor's degree earned 23 per cent more than someone with a year 12 qualification over their lifetimes.
"Adverse life events such as job loss, health problems and relationship breakdown can reduce income, and do not impact everyone equally," the report said.
"Job loss in particular has a persistent negative impact on income, and is more likely to be experienced by people who start on low incomes."
There are some "worrying signs" among the findings.
Poverty levels are the highest they've been since 2001, and have been on a steady rise over that time.
"People most at risk of poverty include those not in paid employment, who come from a migrant background and do not speak English at home, over the age of 65, who rent housing, and in a single person or single parent household," the report said.
It's estimates around 14 per cent of Australians are living in poverty.
"Australians living in poverty (incomes below 50 per cent of the median) face some of the highest barriers to economic mobility," the report said.
"One in 10 Australians experience persistent poverty, and where people live matters a great deal to their ability to escape poverty."
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Education levels were found to be highly correlated with economic mobility.
Those who completed a Bachelor's degree earned 23 per cent more than someone with a year 12 qualification over their lifetimes.
"Adverse life events such as job loss, health problems and relationship breakdown can reduce income, and do not impact everyone equally," the report said.
"Job loss in particular has a persistent negative impact on income, and is more likely to be experienced by people who start on low incomes."
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Despite the majority of the population experiencing at least some degree of income mobility, 'wealth' mobility was far stickier.
Measured as the value of accumulated assets, wealth builds over the course of an individual's lifetime through super annulation, income savings, investments and rising real estate values.
Those with the most and least wealth record the lowest levels of wealth mobility.
"Only one in five people move from the bottom two deciles into the top half of the distribution over the period 2002 to 2022, and similarly, only one in five fall out of the top half of the distribution," the report said.
Gender gap
Despite the positive overall findings, the report finds that within the 1972-82 cohort, just over half of women earned more than their parents did, compared with 77 per cent of men.
Most men (64 per cent) earn higher incomes than their fathers, and most women (68 per cent) earn higher incomes than their mothers," the report said.
"But there is a substantial difference when comparing children's incomes with their parents of the opposite gender."
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While 86 per cent of men earn more than their mothers, only 37 per cent of women earn more than their fathers.
The report also found relationship separation was more financially harmful for women than men.
"Following separation from a long-term partner, women experience a significant decrease in equivalised disposable income, while men's equivalised income increases."
Posted Yesterday at 12:48pm, updated 19h ago
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