Trends in the Distribution of Income and Wealth
Expert reviewed • 14 August 2024 • 10 minute read
An Overview of Income and Wealth Distribution in Australia
Before delving into specific dimensions, it's important to understand the overall landscape of income and wealth distribution in Australia.
Key Current Statistics:
- Gini coefficient for income: 0.324 (indicating moderate inequality)
- Gini coefficient for wealth: 0.621 (indicating high wealth inequality)
- Average household income: $121,108 per year (combined household income)
- Median household wealth: $1,022,200
Trends According to Gender
The gender gap in income and wealth remains a significant issue in Australia, manifesting in both earnings and long-term financial security. Key statistics highlight this disparity:
- Income Gap: In 2023, full-time average weekly earnings were $1,907.10 for men and $1,653.60 for women, resulting in a gender pay gap of 13.3% (slightly improved from 14.1% in 2022).
- Wealth Gap: At retirement age (55-64 years) in 2022, median superannuation balances were $228,000 for men and $165,000 for women.
This persistent gap is attributed to several factors:
- Occupational segregation
- Career interruptions due to family responsibilities
- Discrimination in hiring and promotion practices
- Lower participation in high-paying STEM fields
Recent trends show a gradual narrowing of the gender pay gap over the past decade, with increasing focus on gender pay equity in corporate and government policies. However, the impact on wealth accumulation remains substantial. For instance, as of 2023, women's average superannuation balance was 31% lower than men's, reflecting significant disparities in retirement savings.
Trends According to Age
Age plays a crucial role in income and wealth distribution in Australia, with distinct patterns emerging across different life stages. The data from 2022 reveals significant variations:
Income Distribution by Age:
- 15-24 years: $512 median weekly income
- 25-34 years: $1,245
- 35-44 years: $1,451
- 45-54 years: $1,480 (peak earning years)
- 55-64 years: $1,196
- 65 years and over: $622
Wealth Distribution by Age:
- Under 35 years: $134,000 median household wealth
- 35-44 years: $442,000
- 45-54 years: $741,000
- 55-64 years: $1,021,000 (highest wealth accumulation)
- 65 years and over: $771,000
Trends According to Occupation
Occupation plays a significant role in determining income levels and wealth accumulation potential in Australia, with disparities seen in various professions. Key insights from 2023 data include:
Highest Paying Occupations (Average annual income):
- Surgeons: $406,000
- Anaesthetists: $388,000
- Internal Medicine Specialists: $304,000
- Financial Dealers: $275,000
- Chief Executives and Managing Directors: $272,000
Lowest Paying Occupations (Average annual income):
- Fast Food Cooks: $53,000
- Waiters: $55,000
- Bartenders: $57,000
- Farm Workers: $58,000
- Retail Salespeople: $62,000
Notable trends and observations:
- The ratio of highest to lowest average incomes is approximately 7.7:1, highlighting significant income inequality across occupations.
- There's a growing wage premium for high-skilled, technology-related occupations.
- Many low-skilled service sector jobs are experiencing stagnant wages.
- Professionals in medicine and finance consistently earn significantly more than those in retail and hospitality.
- Households with members in managerial and professional occupations tend to accumulate the highest levels of wealth.
This occupational income disparity significantly impacts wealth accumulation potential, with higher-income professions allowing for greater savings and investment opportunities.
Trends According to Ethnic Background
Ethnic background remains a significant factor in income and wealth distribution in Australia. Notable trends and observations include:
- Some migrant groups, particularly those from India, have higher median incomes than Australian-born individuals.
- Refugees and humanitarian entrants often face significant economic challenges.
- While comprehensive wealth distribution data by ethnicity is limited, studies suggest significant wealth gaps between different ethnic groups.
- Indigenous Australians consistently earn less on average compared to non-Indigenous Australians, with this disparity even more pronounced in terms of average net wealth.
Furthermore, there are various factors that influence these ethnic income and wealth disparities:
- Education levels and recognition of overseas qualifications
- English language proficiency
- Length of time in Australia
- Discrimination in the labour market
Trends According to Family Structure
Family structure plays a crucial role in shaping income and wealth distribution in Australia, with significant variations observed across different household types. Key data from 2022 reveals:
Median Weekly Income by Family Type:
- Couple family with dependent children: $2,671
- Couple only: $2,038
- One parent family with dependent children: $1,124
- Single person: $1,039
Wealth Distribution by Household Type:
- Couple family with dependent children: Median wealth of $972,000
- Couple only: $1,010,000
- One parent family with dependent children: $179,000
- Lone person: $388,000
Key trends and observations:
- Single-parent families face significant economic challenges, with notably lower income and wealth compared to other family structures.
- Dual-income couples have the highest wealth accumulation potential, reflected in their higher median weekly income and wealth figures.
- There's a growing concern over housing affordability for young families, which impacts wealth accumulation.
- Married couples typically accumulate more wealth compared to single individuals and single-parent households.
These disparities highlight the economic advantages of dual-income households and the challenges faced by single-parent families. The substantial difference in median wealth between couple families and single-parent families (over 5 times) highlights the long-term financial impact of family structure.