Recently Treasury has published a paper showing that most people do not stay at the same point on the income scale for an extended period. That is assuredly true, and is also a good thing in as far as it goes.
DPF believes it goes really far, and thinks income mobility is a better measure than income inequality for measuring our health as a decent society:
I have often blogged that in NZ we should focus more on income mobility, and less on income inequality. An income inequality focus means you are comparing a 18 year old first time worker with a 45 year old experienced worker, and complaining they don’t get paid the same.
First off, nobody is arguing they should all be paid the same. That is a canard. There is widespread concern, however, that levels of inequality are getting wider and wider, particularly when you account for accumulated wealth rather than just annual income.
Also, income mobility has similar issues. Does it really tell you much about New Zealand to know that an 18 year old school leaver will very likely earn more once she is 26, or that a 60 year old worker will probably drop down the salary rankings when he retires? Those things demonstrate “income mobility” all right, but say nothing at all about the health of our society.
UPDATE: To be fair to the Treasury authors, they were wise to this issue and concentrated their analysis only on 25-55 year olds. But the examples I give above are simply the clearest cases of a continuous process. People acquire significant skills and experience, for example, between ages 26 and 34, and we would expect that those skills drive wages higher over that period, too. But that is still a lifecycle effect, not an indication of egalitarianism.
There is nothing wrong with the fact that some jobs and people get paid a lot less than others. What would be concerning is if those on low incomes stay there their entire life.
I agree. It is worth noting, however, from the Treasury report that “The movements in income groups were more likely to be of a short distance (to adjacent income groups) rather than long distance.” This means that while most people do not stay in exactly the same income decile for eight years, most people in the bottom, say, four deciles do in fact stay in that broader group, while most people in the top, say, four deciles stay in that broader category, too. “The poor” stay broadly poor, even if “the poorest 10%” don’t usually stay in the bottom 10%.
We need a focus on opportunity, not on outcome. Labour’s core policy is to try and ensure equality of outcome, while I believe it is equality of opportunity that counts.
Again with the canard. Labour has no belief that everyone should be paid the same, or even close to it. DPF is as delusional about Labour as he is about the income mobility tonic.
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