Incomes up for all deciles under National

MSD has done its annual report on incomes and wellbeing. Some key aspects:

New Zealand’s net gains from before the GFC and recession to HES 2017 are better overall than for many OECD countries – the negative impact was more muted here and the recovery has been stronger than for many:

the UK median fell through the GFC and has only just returned to its pre-GFC level (4% above pre-GFC level in latest 2016/17 survey)

Italy, France and Germany were flat through the GFC but have seen small gains in recent years; Spain and Portugal were also fairly flat through the GFC but median incomes have fallen since

the US median in 2014 was much the same as in 2008 before the GFC, but had lifted a little by 2016

in Australia, household incomes across all parts of the distribution have been relatively flat since 2007-08, just as the GFC began to have an impact

New Zealand’s post-GFC gain of around 15% in real terms to 2017 at the median is more like that of the top performers such as Finland and Canada (~16%),

So NZ has had better real income growth post the GFC that almost any other OECD country.

And has the gains just been those at the top:

New Zealand, the share received by the top 1% … around 9% in the mid 1990s, and was steady or slightly falling through to 2014, in the 7-9% range. Information from the NZ Income Survey (using a sample of around 30,000 individuals) shows that there is no evidence of any rise over the years from 2010 to 2015.

Nope. And how about this inequality in incomes we hear about:

There is no evidence of any sustained rise or fall in BHC household income inequality in the last 10-15 years (90:10 ratio) or the last 20 years (Gini for 99%, and top 1% share) or the last 25 years (top 1% share from tax records).

Inconvenient facts for the inequality industry.

One group with negative net tax liability is low- to middle-income households with dependent children. For example, single-earner families with two children can earn up to around $60,000 pa before they pay any net tax (2016 settings). Around half of all households with children receive more in welfare benefits and tax credits than they pay in income tax.

We already have a generous welfare system. If you have two kids you effectively pay no tax until you earn $60,000. Half of all households with kids receive more in welfare than they pay in income tax.

Also of interest is that MSD have not reported the poverty rate for children as in both 2016 and 2017 it dropped so much, they are checking their data. A nice problem to have – explaining why the child poverty rate has dropped so much.

A cynic might wonder if the non-reporting was to prevent the new Government from being embarrassed in case the 2018 rate is actually higher than 2017.