Tuesday, May 07, 2013

Earn $210,000? You're in the top 1 per cent

An income of $210,100 per year makes you ultra-rich, an income of $688,700 makes you uber-rich.

Labor MP Andrew Leigh has calculated the new cut-off points as part of his research for an upcoming book on inequality in Australia entitled Battlers and Billionaires. He began the research in his earlier life as a professor of economics at the Australian National University. He has updated the calculations using Tax Office data for the 2010-11 financial year released last week.

That data shows that only 1 per cent of Australians earned more than $210,100 per year, up from a cut-off point of $194,400 the year before. Only 0.1 per cent of Australians earned more than $688,700 per year.

The data shows inequity climbing for the second consecutive year after sliding during the global financial crisis. In 2010-11 the top one per cent of earners took home 9.2 per cent of Australian income, up from 8.6 per cent two years before. In 2006 before the crisis hit the take exceeded 10 per cent.

“The global financial crisis was just a small deviation from a big long-term trend,” Dr Leigh said. “In just about every English speaking country in the world inequality has been climbing since the early 1980s".

Incomes were their least-equal in 1950 when the top 1 per cent of Australian earners took home 14 per cent of the nation’s pay packet. “It was the Korean war wool boom,” Dr Leigh says. In that year an astonishing 90 per cent of the top group were farmers.”

Buy 1981 the share of the top 1 per cent had fallen to 4.6 per cent, its lowest on record.

“What we have seen since is a globalisation of the jobs market. Executives are mobile. Companies are in an international bidding war to attract and retain them"...

“We have also seen an explosion in information technology. The high earners in the corner offices benefit from this much more than those sitting in the middle.”

“When I worked in a law firm in the 1990s we employed juniors to find documents. Now that’s being done by intelligent machines. The gains are being captured in the wages of the people who want the information rather than the wages of the people who used to find it for them.”

The figures show only 0.05 per cent of Australian taxpayers earned more than a million dollars - around 6,000 people.

In today's Sydney Morning Herald and Age

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