The Herald looks like it has an excellent series this week, on Auckland: A city divided by income.
It’s an issue that has been waiting to be examined in the local context in more depth. It’s been quite a big issue in the UK for a while, with The Spirit Level making an impact before their 2010 election. The US got into it with Occupy Wall Street and their newspapers followed. Now it seems the Herald will examine the issue in the developed country with the greatest increase in inequality in the 2 decades after 1985 – New Zealand.
They’ll examine how food charity was virtually unheard of before the welfare cuts of 1991, to now having Work and Income giving out 544,000 food grants last year, and food banks becoming normal. How diseases associated with poverty doubled in the nineties, paused for a decade, and are now on the rise again (any correlations with governments there at all..?). How in the mid-eighties the mini-suburbs in Auckland had very similar median incomes, and now they are vastly spread.
One of the scariest points is showing how in 2006 dollars the median income went from $23,100 in 1986 to $26,800 in 2006. Not much of an increase over 2 decades, while the wealthiest have had huge increases – 400-fold for top CEOs if the very similar experience of the UK is anything to go by. The pie grew, but only a very select few got a bigger slice.
Internationally the disparity has led to the head of Deutsche Bank fearing a social time bomb, and suggesting bankers need to justify their salaries. Just 7% of the UK public have said that pay of over GBP1 million can be justified, resulting in the Tory government introducing measures to ensure shareholders have a binding vote over CEO pay.
What pressures will result here when the inequities are examined more thoroughly? When people examine the real life cases of those on household incomes over $150,000 (the top 10%) and their lives compared to the many – particularly those in the working poor with household incomes of $42,000 or less. Incidentally the family in the linked story are in the 4th decile – meaning more than 30% of households are poorer than them. How much more of a struggle to get by do they have?
Will the pressures result in a desire to follow the IMF’s advice to reduce inequality by “more progressive labour income taxes” and “strengthening the bargaining power of workers”? After all, as Bill Rosenberg of the CTU notes, the workers share of the pie correlates strongly with union membership and powers…