John Key wants to talk about how average after tax wages have gone up since he became Prime Minister. But as Brian Fallow says in today’s Herald:
Averages are all well and good. If John Key walks into a room the average net worth of the people in the room shoots up, but the rest of them don’t suddenly get any richer. It’s the median income that counts – that’s the point where as many people earn more than that as less than that. Statistics New Zealand says that according to its annual income survey – a more comprehensive set of data than the quarterly employment survey – 63 per cent of wage and salary earners have hourly earnings lower than the overall average for wage and salary earners.
It can also be argued that what matters for living standards is household incomes, not individual incomes, and that people get income from a range of sources other than wages and salaries – superannuation and benefits, investment and rental income, their own businesses and so on. If you look at the annual income survey, the median household income from all sources in June 2008 was $1271 a week, but had fallen to $1236 a week by June last year. The fall was even larger when adjusted for inflation. In real terms the median household income was $80 a week or 6 per cent lower.
So depending on your point of view and which data you select, you can claim that people are 6 per cent better off or 6 per cent worse off.
No prizes for guessing which data John Key wants to talk about – he wants his income in the mix to make his recession sound better. And good on Brian Fallow for pointing this out. It’s what Marty G has been saying on this blog for years;makes me feel a bit better about his moving on.