How employment incomes are sparking a messy class war

Tax cut talk has focused on the incomes of Australia’s 12.6 million workers, but what’s a high wage and what’s not? Don’t trust the numbers.

Tax cut controversy has sparked a lot of talk about Aussies’ incomes in the past couple of weeks.

Labor’s big tweak to previously legislated tax cuts, that will deliver low earners up to $804 more annually while shrinking tax cuts to high-income earners from $9000 to $4500, has fired up more than just those angry about broken election promises.

Class war clashes have appeared in chat rooms and reader comments under media articles about the tax changes. What worries me more is that people are being told that $135,000 or $150,000 a year is no longer a high income and may feel offended or inadequate.

Yes, wages have been climbing, but any worker who earns more than $67,600 a year is being paid more than half of the Australian population.

Official wages numbers don’t tell the full story.

The latest Bureau of Statistics figures, released just before Australia Day, put the average full-time wage at $102,600. For men, average full-time cash earnings are now $107,858 a year, and for women it’s $94,374, the ABS says.

Average annual earnings for all workers - both full-time and part-time - are $77,470, it says.

But if you’re not earning close to six figures, don’t feel like a below-average employee.

Averages are always lifted by the small proportion of income earners on huge salaries. In a simple example, if two employees earn $1m and $50,000 respectively, their average wage is $525,000.

Average wages are much higher than what the majority of Aussies earn. Picture: iStock

Median income is a more accurate reflection, because it is the midpoint of all employee wages. The ABS says our median wage is $1300 per week, or $67,600 annually.

That means that only half of our population gets paid more the $67,600 a year – well below the $135,000 or so that some now see as a regular income.

Older workers often have higher wages thanks to long careers of pay rises, so an average national wage above $100,000 might sound even more offensive for employees aged in their 20s and 30s.

Chosen careers play another key role in determining average wages.

The ABS says mining workers earn an average $3000 a week, while retail, food services, arts and recreation employees receive below $1000, and there many more of those than miners.

Wages are a topic where it still seems taboo to talk about what you earn. Businesses don’t like their employees sharing income details because fears of favouritism can arise, while workers often don’t want feel ashamed or guilty.

We’re happy to talk about superannuation, stock tips, cryptocurrency, property investment and tax cuts. But when it comes to our incomes? Get stuffed.

The most important thing to remember is that a decent wage is not $70,000, or $100,000 or $150,000 or more.

If it’s enough for you to live comfortably and stash some away for a wealthier future, it’s decent.

There will always be doctors, lawyers, sportspeople and others who will burn all their income and more.

At the other end of the scale, I know many retirees who get by comfortably on just the age pension – $28,500 a year – and perhaps $50 a week extra from their super. And they can still stash extra money away.

The best way to make any level of income work is to learn some financial skills about smart spending, saving and wealth-building strategies. There’s a ton of it for free online, as long as you double-check sources and avoid scammers.

Whatever you earn, spend less and invest the rest, and you’ll be right.