Feeling poor? It could be down to who your family is

WHETHER you’re rich or poor isn’t just due to your job — it has a heck of a lot to do with something you can't even control.

“NO thanks, I’m fine,” says my mate, rejecting the waiter’s offer of coffee. “I’m feeling poor at the moment,” she tells me by way of explanation.

“You can’t feel poor,” I point out, while raising my own eyebrow at the $4.50 price tag for a cappuccino. “That’s like saying you feel fat. Poor isn’t a feeling, it’s a reality. You’re either poor or you’re not”.

“Whatever,” she scoffs back “I still feel poor”.

Two weeks out from Christmas and most Australians are feeling the financial squeeze. That’s pretty normal. At this time of year we tend to spend in excess of our ordinary habits. There are presents to buy for the kids. Holiday accommodation needs paying for and flights have to be booked. Christmas parties mean we’re catching taxis home instead of driving or taking public transport — and covering extra drinks when the bar tab runs out. Oh, and the deliciousness of mangoes always manages to outweigh their high cost.

Seriously, who can resist?

But it’s not just the time of year and it’s not just a “feeling”.

While Australia as a whole continues to prosper, that wealth is being shared around less fairly than it was before. A small number of people are reaping the rewards of our country’s economic success, while the rest of us are just getting by.

And with wage growth becoming stagnant and the cost of living (house prices, anyone?) increasing, ordinary Aussies have started to notice. Those who do own property have large mortgages and live in fear of what will happen when interest rates rise, while many credit cards are at capacity.

Earlier this year Australia made history. Along with the Netherlands, our country now holds the record for the longest uninterrupted period of economic growth. We’ve enjoyed a sustained period of prosperity quite unlike any other, but while we’ve grown that tasty economic pie, we’re dividing it less evenly than we did before.

Over the past 25 years, the top 10 per cent of earners saw their incomes rise by 30 per cent, whereas the bottom 10 per cent of earners only got a pay bump of three per cent. The top one per cent of Australian income earners now have more wealth than the bottom 70 per cent combined. Think about it like this. Back in the 1980s, if you worked for a major Australian company in an entry-level job, your CEO probably earned about 10 times as much as you. Today it’s more like 50 times as much and quite possibly more.

Now of course some degree of income and wealth inequality is a good thing. Better pay is an important reward for hard work and entrepreneurship. The pursuit of improving your family’s financial situation is a major force behind driving Australian innovation and productivity. But can we honestly accept that one person’s work can be worth 50 times the work of someone else? In what universe is that fair?

Former Australia Post CEO Ahmed Fahour was criticised for his huge salary. His successor is on a much smaller package. Picture: David Geraghty, The Australian

Here in Australia we like to consider ourselves the land of a fair go. Indeed, compared to the rest of the developed world, Australia has always been a very egalitarian country. Most of us have shared in the prosperity of the last 20 years, even if some have benefited more than others. But the gap between the rich and everyone else is growing faster than it once was. The result is that more of us feel like we’re doing it tough, when seemingly nothing much in our day-to-day has changed.

Our country is becoming less fair and more of us feel poor.

So why is all this happening? A combination of factors. Technological changes and global competition mean that low-skilled jobs are less available than they once were. Decreased power and membership of trade unions mean that collective bargaining is less common than it was. For those who work on weekends in retail or hospitality, the difference is absolutely clear — it’s printed in ink on your fortnightly pay slip. The penalty rate cut back in July has already cost some workers up to $2000.

As this trend towards a smaller number of people controlling more of the money continues, we risk wealth becoming thoroughly entrenched. That is, we risk the average Australian’s ability to access a fair go. The likelihood you’ll ever be rich becomes more about how you are born and not how hard you work.

Let me use a rather crude example: I’m a short person from a tall family and that has its pluses and its minuses. I spend a lot of time adjusting showerheads and driver’s seats but I’ve never been expected to reach something on the top shelf in my life. I’m an anomaly because height is generally hereditary. If your parents or grandparents are tall, the overwhelming chances are that you will be too.

Here in Australia wealth is about half as hereditary as height. Now that’s not so bad compared with say, the US where height and wealth are around equally hereditary. Nonetheless, for a country that believes so emphatically in fairness, we’re not exactly playing on a level field when your shot at prosperity is at least 50 per cent about who your dad is and how many properties he negatively geared.

And on that cheery Christmas note, I might pass on the overpriced coffee as well.