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The Forum > Article Comments > Tilt the playing field of the world economy > Comments

Tilt the playing field of the world economy : Comments

By Ha-Joon Chang, published 6/2/2008

Developing countries need our help while they master advanced technologies and build effective organisations.

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Grim

As Leigh’s article points out, median adult income includes people with no income and people whose income derives from government benefits.

I quoted wages because your earlier post referred to the earnings of a typical tradesman in your youth, and I was trying to get data as close as possible to that example. It would be misleading to compare the living standards of a working tradesman in 1978 with an unemployed person today and conclude that living standards have fallen. Likewise, while Leigh is right that growth in part-time employment has dampened overall growth in both median and average earnings, if we’re trying to compare like with like over time, we should compare full-time earnings then and now.

I accept that average wages are generally skewed upwards by a small number of high income earners, and medians are a better representation of typical earnings. Hence I quoted both median and average wages. However, the common perception that average wages have risen much faster than the median is not supported by the data. Both have risen ahead of inflation, at very similar rates (5.8% and 5.9%, for the time period shown).

The HILDA survey that Leigh quotes does not go back to the 1970s, but I’d guess that, while the median adult income level is less than the median wage, it will have risen faster than the median because:

- Benefit payments as a percentage of household income are much higher now than then;

- Unemployment is lower, and the labour force participation rate is higher, so there are fewer non-employed people;

- The proportion of households deriving significant income from sources other than benefits and wages (eg superannuation and shares) has risen markedly.

Your comparison of trade rates in your youth with minimum wages today is misleading. Either compare minimums with minimums, or actuals with actuals. Most boilermakers earn far more than the minimum. The ACTU’s website says the market rate for a boilermaker is 30-35% above the award:

http://www.worksite.actu.asn.au/showall.php3?secid=4&page=article&artid=42

Here in WA, the market premium is much higher.
Posted by Rhian, Thursday, 14 February 2008 11:21:44 AM
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