The average (median) worker does not earn the (arithmetic) average wage

Eryk Bagshaw, recently[1] appointed economics correspondent for Fairfax, is certainly aware of that. In fact, mentions it right near the end of this scare story about the effects of Labor’s rejection of the second-stage of the Morrison government’s legislated tax cuts. But that didn’t stop the Fairfax subeditor running his article under the headline “Average full-time workers to be $1000 a year worse off under Labor”

To spell it out, the trick here is that Bagshaw is looking at workers who earn between $90,000 [the arithmetic mean of wages for full time workers} and $120,000. He estimates that there are about 1.6 million such workers. That’s a bit over 10 per cent of the workforce (about 13 million people). As he admits, the median full time wage is well below this, and the median wage for all workers lower again. Once pensioners and welfare recipients are taken into account, it’s evident that Bagshaw’s “average workers” are well towards the top end of the income distribution.

This is amusing since I had a previous run-in with Bagshaw over this very issue of headlines. On that occasion, Bagshaw was scathing about a sloppily written ACTU press release, which ended up with a totally inaccurate headline. I don’t think a defence of innocent error is available here. Bagshaw’s story is written in a way that would lead any casual reader to make the same inference as the subeditor. Moreover, there’s no obvious reason why workers receiving between $90K and $120K should be of more interest than any decile of the workforce. Certainly they aren’t average in any meaningful sense. So, without the misleading phrasing, the story would probably have been spiked.

There’s lots more wrong with the story. Most obviously, while Labor has said it will drop the government’s tax cuts, it hasn’t said what it will do instead. Even if they are focused on the bottom end of the income distribution, the reduction in taxes would flow through to the top. Again, Bagshaw sort-of acknowledges this at the bottom, but admitting it first up would have produced a non-story.

[1] According to his LinkedIn entry, Bagshaw was appointed economics correspondent late last year, about the time of the Nine takeover. He had previously been a political correspondent and appears to have no training in economics, or any relevant experience. Make of that what you will.

32 thoughts on “The average (median) worker does not earn the (arithmetic) average wage

  1. Oops, my bad at 3.8m…

    6331908.5 * 0.4 (not 0.6) = 2532763.4 … 2532763.4 – 2500000 = 32763.4; 250000 / 2532763.4 = 0.0987064168725748

    2.5m – it is close enough. Sorry J-D if you wound your way through fist part of reply above. I still don’t get why 2/5 of 1/4 of population total is where guest worker cohort number lies. And again that shouldn’t be 100% all guest worker, but… there’s more.

  2. Thanks, Svante, I’ll write about this when I feel the time is right. In the meantime, as it seems to be an idee fixe for you, further comments belong in the sandpit.

  3. Thankyou, but it is not a subject just I engage with, apparently. Your comment certainly leads to ideas as to what personal preoccupation/idee fixe may motivate your disregard and timing for such a highly topical, widely interlinked, and central politico-economic and environmental issue, one that attracts recurrent wide coverage and engagement at varying quality levels. Adieu.

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