Why the focus should be on hardship, not inequality

The Herald reports:

The number of Kiwi children in relative poverty has jumped over 300,000 for the first time since 2010 – but it’s because of record inequality, despite falling absolute hardship.

So fewer kiwi children are in hardship – that is good news. That is what we should focus on.

The Ministry of Social Development’s annual household incomes report shows that the numbers below a European standard measure of absolute hardship, based on measures such as not having a warm home or two pairs of shoes, fell from 165,000 in 2013 to 145,000 (8 per cent of all children) last year, the lowest number since 2007.

So fewer kids in hardship than under Labour. That’s good. And we should keep working to lower it more. All kids should have warm homes and decent footwear. However the answer is not always as simple as just more money – it is also budgeting advice, parenting skills, better agency support.

Children in benefit-dependent families also dwindled from a recent peak of 235,000 (22 per cent) in 2011, and 202,000 (19 per cent) in 2013, to just 180,000 (17 per cent) last year – the lowest proportion of children living on benefits since the late 1980s.

Again this is great. On almost every social indicator, the data is clear that growing up in a household with no working adults, you on average have much worse outcomes. It’s not just about income either.

So we have lower hardship than under Labour and fewer children in non working households than at any time in last 25 years. That’s headlines we won’t see much of.

But inequality worsened because average incomes for working families increased much faster at high and middle-income levels than for lower-paid workers.

Which shows how silly the focus on inequality is, as opposed to actual hardship. What counts is increasing living standards for all families, not seeing it as a negative thing that middle level incomes rose father than lower incomes.

Council of Trade Unions economist Dr Bill Rosenberg said: “Rising inequality means that even if the economy is growing, the income from it is not being fairly shared.”

No, and only in the former USSR did you have income “fairly” shared. In non communist countries income is earnt by individuals and families, not by the Government to share out. We do redistribute via tax and welfare, but you will never ever have no income inequality unless you tax people so much they all leave, so we have a universally low income society.

And frankly there is nothing wrong with the fact a 50 year old senior executive earns a lot more than an 18 year old in their first job, or a 75 year old who is retired.

Back to the material hardship measurement.  Here’s some data from the report:

• Only 4% of households have severe material deprivation on the EU index – lower than 17 EU countries, and higher than only seven
• For 65+ households, only 1% in severe material deprivation
• For households with children, 8% in severe material deprivation on EU index – putting us at the midpoint for the EU
• The percentage of children in hardship on the NZ index has declined from 17% in 2008 to 12% currently