Aussie Strugglers or Privileged Poor?

The front page of today’s Age pictures a newlywed Altona couple, aged 25 and 27, as examples of the typical Australian, worried about rising costs of living.

They earn $130,000 a year between them, and ‘have a $420,000 mortgage, a $380,000 Pascoe Vale investment property they bought with another couple in July 2012, and plans to start a family’.

Social media has been buzzing today with reactions to the paper’s implication that the young couple – who have put off having kids due to concerns about the cost of child care – are archetypal Aussie battlers.

Just what constitutes middle class, middle income and genuine ‘struggling’ has been a hot conversational topic lately.

’We all think we’re middle class’

‘I don’t think most people have a sense of what the typical Australian’s income is,’ wrote the ACTU’s Matt Cowgill yesterday. ‘We all think we’re middle class.’

He shares some statistics that do give an accurate picture of ‘typical’ earnings. Among full-time workers, the average wage is $72,800 per year. But of course, the average wage is distorted by extremes at the top and bottom of the scale.

A more accurate picture is provided by the median wage figures. ‘If you earn half the median salary, your wage is in the middle of the distribution – it’s higher than 50% of workers, and lower than the other 50%.’

The median full-time worker’s wage was $57,400 in August 2011 (most recent figures). When you figure in part-time workers, this drops to $48,684.

The ‘privileged poor’

Last week, social commentator Rachel Hills hit a collective nerve with her Daily Life piece decrying the ‘privileged poor’, challenging readers to think twice about their place on the economic scale before crying ‘poor’, or ‘broke’ (as in too poor to take an overseas holiday, or go out to dinner).

‘In our grandparents’ generation, being comfortable meant knowing you would have enough money to eat and pay your bills, and usually enough to save and do some fun things on the side. Now, it seems to mean having enough money to do whatever you want, whenever you want, and never saying no to anything … and still having enough left over to put together a nest egg.’

For the more than two million Australians classified as living in poverty by the Australian Council of Social Services, ‘their challenges aren’t choosing between paying off their mortgage or paying for private school, but choosing between turning on the heating during winter and having enough to eat’.

Defining the ‘ultra rich’

Fairfax writer Peter Martin has recently written about the topic, too. He quotes an outraged reader, responding to his observation that ‘anyone earning more than $210,000 a year was ultra rich, in the top one per cent’:

‘Assuming a $600k mortgage (appropriate to this level of income) and two children in private school plus additional outgoings this leaves a balance of only $21k for holidays and other incidentals and/or saving.’

Infamously, Labor MP Joel Fitzgibbon recently claimed that families on $250,000 in his electorate are ‘struggling’. Martin suggests he is out of touch with the realities of struggling families – tax office statistics for his electorate show that the average income there is roughly $60,000.

This tunnel vision isn’t confined to the unfortunate Fitzgibbon, though, he says. ‘None of us get out enough.’

‘We tend to live near people who earn something near what we are earning. If they earn slightly more than us we think we’re behind. If they earn slightly less we think we’re ahead. But we don’t look far beyond them.’

‘Less room in your heart’

Does this tunnel vision matter?

Yes, argues Rachel Hills. ‘It makes it easier to look past the struggles of those who are genuinely struggling.’

‘When you’re declaring social bankruptcy over drinking cleanskin wine instead of $17 cocktails … when this becomes your vision of what “poverty” looks like – there is less room in your heart for those for whom poverty means having no choice at all.’

Peter Martin identifies another problem with our tendency to underestimate our privilege – most are keen to defend the interests of those above us, because of our own aspirations to ‘one day move up a notch or two’.

‘We think others earn more than they do, we aspire to earn more than we do, and many of us have no idea how well off we are.’

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