Most Gen Xers earn more than their parents, but the situation for Gen Y and Z is unclear

admin — Wed, 10 Jul 2024 18:48:21 +0000

In short:

Australia’s economic mobility rates are among the best in the world.

Rising poverty, the gender pay gap and the economic conditions faced by people born after 1990 may limit economic mobility.

What’s next?

More data is needed to determine whether people born after 1990 will be worse off than their parents throughout their lives.

Almost two-thirds of Australians born between 1972 and 1982 earn more than their parents at a similar age, according to the Productivity Commission. But the data shows that those born after 1990 have seen their incomes grow more slowly.

In its latest report on economic mobility in Australia, the Productivity Commission (PC) found that overall levels of economic mobility in Australia are high compared to global standards.

“For most Australians, the amount their parents earned when they were young is not a life sentence,” chairwoman Danielle Wood said.

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 find that economic mobility ranks just behind Sweden and well above the United States for most of the population.

Generational concerns

People born after 1990 are not on the same income path as those born in earlier years.

The previous PC report found that average disposable income rose significantly across all age groups between 2001 and 2008, but fell only among young Australians (15–34) between 2008 and 2018.

“The weak growth in income for those born in the 1990s reflects the poor economic performance that young people experienced following the global financial crisis,” the report says.

“Young Australians in 2001 faced stagnant wages and were more likely to be offered jobs with lower educational requirements and lower earning potential than younger people with comparable qualifications,” the report says.

“Which could have long-term negative consequences for their salaries and career choices.”

The PC report emphasizes that more years of data are needed to draw better conclusions about income mobility over the life course, but also notes that “the lack of growth in income for those born in the 1990s suggests that the trend of each successive generation earning more than the previous one may have come to a halt.”

Growing poverty

Among the findings, there are some “worrying signals.”

The poverty level is at its highest since 2001 and has been rising steadily since then.

“The people most at risk of poverty are those who are unemployed, come from a migrant background, do not speak English at home, are over 65 years old, rent apartments and live in single-person families or with one parent,” the report reads.

It is estimated that around 14 per cent of Australians live in poverty.

“Australians living in poverty (those with incomes below 50 per cent of the median) face some of the greatest barriers to economic mobility,” the report says.

“One in ten Australians experience persistent poverty and where people live has a huge impact on their ability to escape poverty.”

It has been found that the level of education is closely related to economic mobility.

Bachelor’s degree graduates earned 23 percent more over their lifetime than those who completed year 12 of college.

“Adverse life events such as job loss, health problems or relationship breakdowns can result in reduced income and do not affect everyone equally,” the report reads.

“Job loss has a particularly lasting negative impact on income and is more likely to occur for people who start with low incomes.”

Income and assets

Although most of the population experienced at least some degree of income mobility, the mobility of “wealth” was much more constant.

Wealth, measured by the value of accumulated assets, grows throughout a person’s lifetime through pension contributions, savings, investments and appreciation in real estate.

The richest and poorest people experience the lowest levels of wealth mobility.

“Only one in five people moved from the bottom two deciles to the top half of the distribution between 2002 and 2022, and similarly, only one in five people dropped out of the top half of the distribution,” the report reads.

The difference between the sexes

Despite the positive overall findings, the report found that in the 1972–82 age group, just over half of women earned more than their parents, while the figure for men was 77%.

“Most men (64%) earn more than their fathers, and most women (68%) earn more than their mothers,” the report reads.

“But there is a fundamental difference when you compare the incomes of children with those of their opposite-sex parents.”

While 86 percent of men earn more than their mothers, only 37 percent of women earn more than their fathers.

The report also found that relationship breakdown is more financially damaging for women than for men.

“Following a breakup with a long-term partner, women experience a significant decline in their equivalized disposable income, while men’s equivalized income increases.”

Published 18 hours agoWed 10 Jul 2024 at 18:48, updated 13 hours agoWed 10 Jul 2024 at 23:40

#Gen #Xers #earn #parents #situation #Gen #unclear

Gen – Convocatoria Laboral

Most Gen Xers earn more than their parents, but the situation for Gen Y and Z is unclear

In short:

What’s next?

Generational concerns