Finance Finance News The working poor: one-in-five households being left behind

The working poor: one-in-five households being left behind

working poor Australia
One in five households recorded a gross income of less than $650 a week. Photo: Getty
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It was heartening on Thursday to see job ads continue to tick up, rising 1.7 per cent in the three months to the end of May, or 9.2 per cent in the past year.

But before we get too excited, this week’s census data raises real concerns that the kinds of jobs being created aren’t paying enough for workers to live on.

The alarming fact is that one-fifth of households in 2016 recorded a gross income, including all government benefits, of less than $650 a week.

To put that in context, that’s less than the full couple rate for the aged pension ($670 a week) and less than a full-time worker on the minimum wage ($673).

Think about that for a minute. If 1.6 million households say they have income of less than $650, and if that figure by definition excludes retiree couples living on the full pension, or on a higher combination of pension and super, we’ve got a huge problem.

The census, for some reason, compares the number of households on $650 or less with households falling under the same threshold five years ago.

That’s a bit strange, because the consumer price index has risen a cumulative 9.85 per cent in that time. So you’d need $714 today to buy the same goods and services as in 2011.

For middle Australia, that’s proving less of a problem – real wages are not rising as quickly as GDP growth, which means companies are taking a larger share of growth as profits, but at least they’re ahead of inflation.

So while the economy expanded 6.2 per cent in real terms over five years, the median personal income was up 4.6 per cent , and median household incomes are up 6.1 per cent. Not great, but a lot better than for the sub-$650 group.

The Australian Council of Social Services estimates that 800,000 households are in housing stress – spending more than 30 per cent of their income on housing – and while that’s not an exact fit with the sub-$650 group, the overlap would be very large.

 Who are we forgetting?

When Bob Menzies spoke of a ‘forgotten people’ in his famous 1942 speech, he meant a middle class who were not wealthy, but neither backed by the then-huge union movement.

Well, times change. The census reveals an alarmingly large cohort of people forgotten for other reasons.

They are left behind by a skyrocketing housing market, stuck in the rut of under-employment, attacked as a drain on the budget or for not paying more tax, seeing their penalty rates cut, or forced to jump through undignified job-seeker hoops.

So yes, it’s natural for the political and media classes to welcome an uptick in job ads. But we have to ask if that’s going to do anything to lift the fortunes of the gradually swelling ranks of working poor.

This year’s census summary was released under the headline “Census reveals: we’re a fast changing nation”.

When one in five households live on less that the age pension and less than a single minimum wage, “a fast polarising nation” might be more apt.

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