Tuesday, December 06, 2011

Our rich are getting richer.

Australia is among those nations becoming becoming less equal...

While elsewhere...

Australia’s top 1 per cent are grabbing a greater share of our income than at any time since the 1950s.

A new OECD report finds Australian incomes were their most evenly distributed at the end of the 1970s when the top 1 per cent of earners took home 4.8 per cent of the income. Since the early eighties the proportion has climbed to 8.8 per cent, meaning Australia’s top earners amass for themselves nine times as much income as as if it was distributed evenly.

In almost all of the OECD countries surveyed income inequality was at its highest before the very high before the first world war and fell sahrply during the second world war.

But whereas income inequality has remained low in mainland European countries and Japan since bottoming in the seventies, it has climbed since the eighties in the US and Australia, Canada, Ireland and the United Kingdom.

The surge has been particularly dramatic in the United States which gave its top 1 per cent around 8 per cent of the national income at the turn of the 1980s and 18 per cent in the most recent reading.

Australia also stands out because of how quickly all ranges have grown... Between the mid-1980s and the late 2000s the income enjoyed by the top ten percent of households has soared 4.5 per cent per year in real terms, more than in any other OECD member.

Income earned by the bottom ten percent has climbed 3 per cent per year, also one the fastest rates in the OECD.

But the compounding effect of the different rates has opened up a very wide income gap.

A family taking home $30,000 in the mid-1980s would be earning $68,000 today if income had grown 3 per cent per year. A family earning $30,000 enjoying a 4.5 per cent rate of growth would be earning $103,000 today.

Entitled Divided We stand the report is unable to identify any one single cause of growing income inequality in English speaking nations, saying it could flow from increased global competition for highly-skilled workers, it could be that advances in information technology are making highly-skilled workers more prized, or it could be that highly paid workers are putting in more hours.

It also identifies “assortative mating”, a phenomenon in which high earners increasingly marry parters who are also high earning – “doctors marrying doctors rather than nurses”. It says 40 per cent of couples where both partners work have similar earnings compared with 33 per cent two decades ago.

Published in today's SMH and Age


Annual real household income growth
Mid-1980s to late 2000s

Bottom 10 per cent Top 10 per cent

Australia 3.0% 4.5%
Canada 0.9% 1.6%
France 1.6% 1.3%
Germany 0.1% 1.6%
Israel -1.1% 2.4%
New Zealand 1.1% 2.5%
United Kingdom 0.9% 2.5%
United States 0.5% 1.9%

Disposable household income, adjusted for inflation

Divided We stand: Why inequality keeps rising, OECD 2011

Inequality in Australia, As Seen by the OECD

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