Raising the BARR – Week ending 10 February 2017

Sharing the Wealth

The rich get richer and the poor get the picture, goes the old saying. Sadly, over the past 20-30 years, this has been truer in Australia than at any other time since the late 1800’s. Is this progress? Over the past 20 years, the top 20% of wage earners have seen their wages go up by about 45%. At the same time the bottom 20% of wage earners have seen their wages rise by just 14%.

It’s all the Unions fault! When Unions were strong and almost half of all Australians belonged to Unions, wages of the bottom, lowest paid, rose at levels almost exactly the same as the top executives. The minimum wage rose. Gaps in pay between men and women, or white and Aboriginal, shrunk. The wealth of our entire country was in its most balanced, some might say “fairest” position, since white settlement.

A balanced wealth across our community in the 50’s, 60’s and 70’s, through wages, allowed our entire economy to grow faster than at any other time. Because it is a well-known fact that almost every cent of wages earned, that goes into a low or middle income household, gets spent into the economy. This then creates more turn-over for paper shops, hamburger shops, hairdressers, supermarkets, car yards, petrol stations, etc. And when there is more turnover, more spending, more demand for services, then more people need to be employed. And when more people are employed, more taxes are paid and the load is spread more evenly for all wage earners – top to bottom.

But, Unions saw their numbers fall. 49% union membership in 1980, became 40% in 1992, 30% in 1997, 20% in 2006 and is currently at around 15%. While union membership has crashed, the wage gap between top and bottom earners has sky-rocketed. And this is damaging our economy. Because the top wage earners do funny things with their money, like saving and investing, which is not good for employment. They simply don’t spend enough of their wage back into the economy, albeit that the one person can only go for so many dinners or haircuts. Inequity in wealth and wages is bad for the economy, but unfortunately it has mostly been the trend for the past 20 years. If only those Unions could get their membership levels back up.