Report shows incomes up, inequality down

Written By: - Date published: 1:50 pm, July 4th, 2008 - 32 comments
Categories: labour, national, Social issues, workers' rights - Tags: , ,

The MSD’s Incomes Report provides a wealth of information. For instance, here’s how the mean and median household incomes have moved since 1982.

Households suffered a massive erosion of income during the rightwing revolution from 1984 to the late 1990s. The leftwing governments since 1999 put that to a stop that. Now, incomes have regained and grown rapidly past those 1982 levels.

And during the period of increased incomes since 2001, most of the benefit has gone to middle and low income families. As you can see, it is the 4 lower-income deciles with the largest % increase in income (although the lowest decile, beneficiaries, has been left behind).

Compare that to what happened to incomes between 1988 and 2001. Under National, the poor really did get poorer and a few at the top got much richer, thanks to lower taxes on the rich, stagnant wages, and slashed benefits.

This graph shows how many times larger the 80th percentile income is than the 20th percentile. The higher the number – the wider the gap between rich and poor. (AHC and BHC are just two different ways of calculating the gap). As you can see the gap between rich and poor exploded during the rightwing revolution and it took some time before policies countering that took effect but we are now moving, slowly, back towards a more equitable situation.

But, remember, it’s still far from equal, here is the portion of total national income, by income deciles. The top 10% have a combined income higher than the bottom 45% combined. Not exactly a socialist utopia.

(Full size graphs)

32 comments on “Report shows incomes up, inequality down”

  1. Lew 1

    Steve, do you reckon you could put up full-size images for those of us who don’t have our monitor set to My First Computer resolution?

    L

  2. Sorry, had to make the graphs smaller, space constraints. They’re not actually that much bigger in the report. You can still see the patterns in the small versions but I’ll attach an image of the full size graphs.

  3. What a load of rot, everybody knows the gap between the rich and poor is increasing by the hour. The us and them mentality will cause havoc for kiwi society. Get real Labour and acknowledge the problem before it is too late. Stop the spin and address the issues.

    [who to believe Dad4justice or the Ministry of Social Development? I wonder which is in the best position to assess income levels across the country? SP]

  4. Matthew Pilott 4

    Ahem.

    Slogan, slogan, slogan, “stop the spin, Labour”, slogan.

    Rot indeed.

  5. Ray 5

    I find it interesting that on a day when there seems to be a genuine nation wide protest at the Labour lead Government
    You and several other left wing blogs are putting up graphs to prove that we would be better off with labour

    Your time would have been better spent pushing those “Getting a free ride” posters

    Muldon used to try and make points with graphs, it is easy done but they have no real impact. It depends on the time span yadda, yadda, and can be used to prove just about anything

    More work with the posters which had a real message that was funny would have had much more impact

    [lprent: If you want a clipping service, then find one. This site does commentary]

  6. Scribe 6

    SP,

    Looking at that top graph, which I’m really struggling to read, it seems that things increased most significantly between about 1994 and 1998, when National were running things, and has grown since, but at a slower rate.

    Of course, it might be a graph tracking “making things harder the poor”, meaning a rise in the graphs is bad. Just can’t read it.

  7. dave 7

    Of course incomes are up, the state is paying a bigger proportion. What is needed is extra productivity and higher wages. Imagine how much higher ” income” would be if families who earned under 32k were to take part in all the grants and subsidies WINZ can provide them. If I was a family earning 34k, I`d love to see my wages drop by 2k too, just so I could pick up a further 3k (tax free) or so at WINZ.

    No I cant read your graphs either…..

  8. dave 8

    Of course incomes are up, the state is paying a bigger proportion. What is needed is extra productivity and higher wages. Imagine how much higher ” income” would be if families who earned under 32k were to take part in all the grants and subsidies WINZ can provide them. If I was a family earning 34k, I`d love to see my wages drop by 2k too, just so I could pick up a further 3k (tax free) or so at WINZ. [The situation you discribe is fictional. SP]

    It’s a sad state when incomes go up higher than wages.

    No I cant read your graphs either…..

  9. Scribe. What it shows is that incomes fall gradually in the early 1980s, more rapidly in the mid 1980s, slightly turned up at the end of the 1980s, then plunged in the early and mid 1990s, before beginning to recover – they were only back at 1990 levels in 1999, and have grown rapidly since – see the attachment of the larger graphs… or, how about actually reading the report that is linked to in the opening sentence?

  10. dave. I don’t understand what you’re trying to say and I don’t think you understand the terms ‘income’ productivity’ and ‘wages’. The income being talked about is the actual wealth (ie inflation adjusted) that the households have coming in – productivity and wages are just elements of changing income, which is the meaasure that really matters, it is the measure of how much stuff you can buy.

    click on the link for the bigger versions of the graphs (which are not mine, they are MSD’s)

  11. dave 11

    well then its tax payer subsidised “wealth” – and that tax payer funded proportion is way higher than the rate of inflation or increased incomes for many families ==> current situation. All funded, or course by the rich on higher tax rates.

  12. dave 12

    .. inxcreased wages, I meant, your editing gimmick doesnt even let me change a word. Whats the point in having it?

    [I don’t why the edit function didn’t work one time for you. if you don’t like it, you’re always welcome to set up your own blog with its own awesome edit function. SP]

  13. dave. what are you talking about? These are median incomes that have gone up, not benefit rates (which, btw, haven’t gone up in real terms).

    Scribe. Your argument that income growth started at 1994, when incomes had fallen to their nadir is like if we had a graph of a person’s comfort level as you tortured her… over time her comfortlevel falls until the point when you stop torturing so much, as you ease off the torture, the comfort level improves. When you finally are made to stop and medicial help arrives, her comfort level continue to rise…. now, should you be given credit for starting the rise in her comfort level?

  14. Scribe 14

    Steve,

    That’s a long question. But yes, you should. You inherited a system that tortured her, and continued doing the same thing until you realised the error of your ways.

    Your constant argument is that National, in the 1990s, continuously raped and pillaged the poor in New Zealand throughout the decade.

    The graph suggests that they realised things were going badly for people and they did something proactive to fix it.

    And if the difference became noticeable in 1994, the wheels to bring about the improvement would have been set in motion at least a year earlier.

  15. vto 15

    ok thats it, I’m voting labour

    captcha: resultant con. Who writes these things?

  16. dave 16

    Did I say benefit rates? no I didnt. aggregate tax funded WFF increases in the past year alone have been higher than the mean wage increase.

  17. dave. WfF is a tax cut.

    Scribe. Are you honestly arguing that

    a) the neoliberal revolution was a mistake (I agree)

    b) that National repented and had changed its ways by the late 1990s (because why then the Contact and AIA sell-offs? why the ACC privatisation, why the plan to corporatise the roads – all from the 1996-1999 term?)

  18. Scribe 18

    Steve,

    What I’m saying is that you’ve posted a graph that seems to contradict one of your ongoing messages — that things got worse for the country the longer National stayed in power. By this measure, at least, that’s obviously untrue.

    captcha: society perfect

    Wasn’t then, isn’t now, won’t be after this year’s election (regardless of outcome).

  19. ants 19

    Steve, that is one of the best Tui signs I’ve heard this year!

    “Working For Families is a tax cut………yeah right!”

  20. dave 20

    WFF is NOT a tax cut.

    WFF is not a tax cut

    WFF is not a tax cut.

    My partner was getting WFF before she was working but she was hardly getting a a tax cut. Are you saying that my tax is cut but the money is going somewhere else? Yes, thats what you should have said. but it is not a tax cut because some recipients are not paying tax…. it is in fact redistribution.

    NOw that has been establisehd that WFF is NOT a tax cut, then WFF has gone up in real terms higher than benefits, wages or WINZ grants.

  21. Matthew Pilott 21

    You can only get WfF by paying tax. You get your own tax back. What does that look like to you guys?

  22. dave: Working For Families is a tax cut. You can only get it by paying tax. Thats why it is called WORKING For Families. If it was a social welfare benefit it would be called FFF or FREE-LOADING For Families.

    Whether WFF really will work for families in the long term is another question.

  23. dave 23

    dave: Working For Families is a tax cut. You can only get it by paying tax.
    Wrong. Actually, you can get WFF if you dont pay tax. If you are a female you can get it if your partner works part time…. as WFF goes to the female partner who can be a non earner – and therefore does not pay tax.

    So that earner gets his own tax back by redistribution, not by a tax cut.

  24. Matthew Pilott 24

    dave, do you split hairs for a livng? It’s a targeted tax cut. Can we agree on that wording, perhaps?

  25. dave 25

    No its not targeted tax cut, its targeted tax relief for families. To get a tax cut you have to pay tax. By definition some people don’t pay tax but collect WFF as their sole source of income, but their partner who does earn gets tax relief for being part of a family that’s why the second F in WFF is Family. No family, no tax relief. If both did not earn and did not collect a benefit because they were on a WINZ stand down they would still get WFF if they had kids..

    WFF is NOT a tax cut. No, not a tax cut, nope, no tax cut, no tax is cut. None whatsoever, for some people. Not at all. NO tax to cut. So it cant be a tax cut. Just like I cant cut my thumb if I havent got a thumb.

  26. Swampy 26

    WFF is a welfare benefit. People go to Winz or Inland Revenue to apply for it, those are the two government departments that hand out welfare payments, mostly.

  27. vto 27

    Calling WFF anything other than welfare is ‘misleading and deceptive conduct’ contrary to s.9 of the Fair Trading Act.

    ‘Targeted tax relief’ or anything else is just political spinnage.

  28. Felix 28

    Inland Revenue are handing out welfare payments? Seriously?

    Maybe I should stop throwing their mail away…

    Really though, by your own logic couldn’t I say that if people go to IRD to apply for something then in must be a tax credit as IRD are the department responsible for tax credits, mostly?

  29. RedLogix 29

    Who cares what you want to call it?

    WFF = Fewer kiwi kidz growing up in poverty.

    And your problem with this is?

  30. We are a lazy country, end of story. 22 out of 29 countries for output of GDP per hour. That means we are NOT producing income to pay for benefits, tax cuts, health. If we could reach even Spain’s GDP per hour, we could drop the top tax to 30% and still bring in THE SAME REVENUE.

    The only way to reduce the gap long term is to increase the skill level of the workforce, move away from agriculture and general manufacturing and focus on innovation, technology and research.

    We are still in the bottom 1/3 of GDP per hour.

    We can not expect higher wages if productivity does not increase.

    We only have 18,000 unemployed last count. So unemployment is under control (ahem). We can’t increase the labour force ’cause it is not there!

    Who is responsible for increasing the skill level of close to 400,000 people – we have one of the highest unskilled workforces in the OECD. Employer, government or individual? I say the government need to tell the individual, the employer need to support the individual, but it is up to the individual to make the change.

    If every person became even 10% more productive in the next 5 years we could drag ourselves out of the gutter.

    But you can not ask an employer to pay you more if you are only putting in 75% effort. The only people who get paid more for doing less are bureaucrats.

    Wake up left, right and middle political boffins. It is not rocket science. You all love stats – 22/29 but our work force works some of the longest hours in the OECD?

    Upskill, improve efficiency, reduce compliance costs and “dead time” that does not produce anything and we can crawl back up to being one of the wealthier countries.

    How does a 12-15 billion surplus sound? Doesn’t take much. Just a change of attitude.

  31. roger nome 31

    “22 out of 29 countries for output of GDP per hour”

    That’s becasue of our relitively high employment rate, and long work hours. You need to educate yourself.

  32. Jamesey 32

    Karl,

    Its got absolutely nothing to do with a lazy country, but to do with the fact that we have boneheaded business and government leaders who don’t believe in government investment in the said innovation, technology, and research.

    I’d guess our low productivity levels would be mirrored by low spending on Research and Development, most of which is currently paid for and carried out by the government. Unlike Statsnz I count universities as part of the government, because they’re heavily subsidised by the public purse and therefore only quasi-private.

    Of the $1,593.1 million total R&D expenditure in 2004, New Zealand?s government was the largest funding source, contributing 45.1 percent of this total, while the business sector funded 38.5 percent. Included in ?other? funding sources were universities and overseas sources, which provided 7.1 percent and 6.8 percent of New Zealand?s R&D expenditure, respectively.

    To quote a Western diplomat, who was quoted in a 1989 New York Times article.
    ‘I couldn’t believe a Government could be re-elected on these indicator numbers,” a Western diplomat said. ”Nineteen percent inflation, unemployment at its highest point in history, real incomes down. Just about every number that could be wrong was wrong.’
    http://tinyurl.com/5h98fc

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