Median Incomes over time

As I hoped, my analysis of how a worker on the average wage has done in the 1990s and 2000s was wildy sucessful as it induced rage from those quarters where facts get in the way of ideology.

Now one fair point raised was, how different is it if one uses median wage rather than mean wage.  The problem is there is no quarterly data series going back that far with median wage.

But we do have the census data.  And while the dates are not a perfect fit, they do still allow us to look at what happened to net real earnings of a fulltime employee on the median wage/income.

Now as before let’s look at gross nominal median FT income.

Gross nominal median FT income
1991 $25,100
2001 $32,400
2006 $38,400

Over the decade National was roughly  in office, median income went up $7,300 or 29.1%. A half decade under Labour and the increase is $6,000 or 18.5%.  The average per year in terms of growth then is 2.9% 1990s and 3.7% 2000s.

But now we take tax off, to get after tax income.

Net nominal median FT income
1991 $19,307
2001 $26,166
2006 $30,858

Over the decade National was roughly  in office, net median income went up $6,859 or 35.5%. A half decade under Labour and the increase is $4,692 or 17.9%.  The average per year in terms of growth then is 3.6% 1990s and 3.6% 2000s.

And then we adjust to get real figures taking into account inflation.  The CPI was 736 in 1991, 869 in 2001 and 985 in 2006.

Net real median FT income in March 2006$
1991 $25,839
2001 $29,659
2006 $30,858

Over the decade National was roughly  in office, net real median income went up $3,820 or 14.8%. A half decade under Labour and the increase is $1,199 or 4.0%.  The average per year in terms of growth then is 1.5% 1990s and 0.8% 2000s.

So a fulltime worker on the median income, has had their real after tax income go up only 4% over five years.  Around half of what it was in the 1990s.

Now the point of these posts is not to claim that magically workers do better under Party A than Party B, even though it is nice to wind up the chorus of dissent.  It was principally to rebut those exact claims from said chorus about how much better off the average worker is.  Because in terms of real after tax income they are not.

But the important point is to remind people why both low inflation and low taxes are important.  If you do not adjust tax brackets (at a minimum) then the higher level of tax you pay, plus inflation chews up your pay rises.

In fact if your pay rise is exactly the same as the inflation rate, then your real earnings drop because the average tax you pay increases.