It’s been well documented that reports of Australians’ incomes sometimes betray a fair bit of ignorance about what constitutes a typical or a high income. I’ve been interested in whether most Australians share this tendency of some journalists to imagine that a family comfortably ensconced in the upper echelons of the income distribution is actually on a ‘middle income’. Do people really think that $150 000 or $200 000 a year is typical?
A recent Essential Report by EMC tried to find this out. They asked a sample of respondents what they perceive to be a middle income and what they regard as a sufficient income to qualify as well off or wealthy. They asked this question about both households and individuals. It turns out that Australians have quite a realistic sense of what constitutes a typical income in today’s Australia.
The median response to EMC’s question about how much income would define a household as ‘middle income’ was $94 000 per year. A gross income of $94 000 would have put a household at around the 64th percentile of the household income distribution in 2009-10, when the last ABS household income survey was conducted. Australians’ understanding of what qualifies as a middle income isn’t too far the mark.
The research showed that people regard $111 000 per year as enough to make you ‘well off’, while $159 000 makes you ‘wealthy’. This doesn’t quite square with reports that households on over $150 000 are doing it tough. $111 000 would put a household at around the 72nd percentile of the distribution, while a household on $159 000 per year would be earning more than about 87% of Australian households (again, using 2009-10 numbers).
People in the EMC poll thought that an individual who earns $66 000 a year was on a middle income. This figure is just below the average earnings of a full-time worker, a bit above the median for a full time worker. This is a little high for an estimate of the median individual income, but is definitely in the range of what would be considered as a middle income. The research suggested that an income of $106 000 a year was enough to make an individual wealthy, in the eyes of their fellow Australians. Given that this is around 50% above the mean for a full-time worker, and not far off double the median, it seems reasonable to agree that such an income is relatively high.
The evidence is quite clear: reports which suggest that households in the top 10% or 20% of households are actually ‘typical’ don’t square with the facts, and they don’t square with Australians’ views about what qualifies as a middle income. It’s worth bearing this in mind as another federal budget looms.
[Note: ideally, such a survey would ask people to think about working age households, or households in which at least one person worked. Respondents would also be asked to define what they thought was a middle income for a particular household type - say a family with two adults and two children. This would enable us to compare their responses to the data on equivalised incomes.]
UPDATE: Someone from EMC has helpfully made contact with me to clarify one point about their survey – they did actually ask respondents to define ‘middle income’ (etc.) for a household of 2 parents and 2 children.
“Look, Mummy, what’s that?”
“It’s journalism, darling.”
Nice blog :)
Just wondering out loud – when people on over $100K hear that they’re middle income earners often enough, do you reckon it starts working like a reverse Emperor’s New Clothes? So even though they’re wearing good clothes and driving nice cars, they start to feel a little naked?
All the definition in the past about Aussie battlers – and yet there’s a dearth of current imagination about who we Australians really are now, a lack of really being able to see ourselves, I wonder how many people really are visionless enough to start feeling the pangs of deprivation on their 100K?
It’s an interesting question. I think to some extent the view we have of our own income, relative to others’, is skewed by the fact that we tend to work and socialise with people who are similar to us in various ways. If we have a high income relative to most people, but not relative to our friends, neighbours and co-workers, than that will affect our perception of our place in the overall income distribution.
PS thanks!
You’re welcome. And that’s a good point.
I’ve begun reading Alain de Botton’s Religion for Atheists lately and in it he talks about one of the benefits religion brought in the past was that communal gatherings of UNlikeminded people would occur where you would be forced to brush up against those that are not you. Seems to be something that is good for us to do … and good when a culture has commonly accepted activities where its members are sort of forced to do so … which ours doesn’t :)
[...] The research showed that people regard $111 000 per year as enough to make you ‘well off’, while $159 000 makes you ‘wealthy’. This doesn’t quite square with reports that households on over $150 000 are doing it tough . $111 000 would put a household at around the 72nd percentile of the distribution, while a household on $159 000 per year would be earning more than about 87% of Australian households (again, using 2009-10 numbers). People in the EMC poll thought that an individual who earns $66 000 a year was on a middle income. What do Australians regard as a ‘middle income’? « We are all dead. [...]
Hi Matt
My guess is the journos think about what they earn, consider the rumours about Mel and Kochie’s incomes, and figure $150k pa is a bit low.
I remember on Fox News one of the more decorous journalists arguing that $250 k was not really enough to put a kid thru college. Damn Obama’s Muslim Socialism..