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. “Bagshaw was appointed economics correspondent late last year, about the time of the News takeover”

    Fairfax was bought by Nine, not News.

    Bagshaw looks like he’s trying to make a name for himself by writing sexed up stories so that he can beat out the earnest but boring Jessica Irvine to succeed Ross Gittins as economics editor. Given the relentless tabloidisation of Fairfax (which long preceded its takeover by Nine) I’d say he’s in with a big chance.

  2. Also, average full time wages are $87000 not $90000. This might seem like a small difference but at current rates of wage increase average wages won’t reach $90000 for two years, two thirds of the way through Labor’s term.

  3. John,
    Enjoy your approach to the political economy.
    The concepts of the average/mean & median in wages have often been misused along with full-time employment, part-time employment and underemployment.
    Another misused concept within the area of employment and wages is that of unemployment and ‘full’ employment.
    Please correct me if I’m wrong, internationally full employment is accepted to be around 4.5% unemployed [by definition] of working age population.
    Our government and Business sector require around 4.5% of workers to be unemployed for the economy to run ‘efficiently’.
    But the 4.5% who are then unemployed are punished by both these sectors with lower than poverty standard payments and media abuse of their situation.
    Surely if we require 4.5% to be unemployed then they should be recompensed appropriately while being unemployed and thanked appropriately by those sectors for taking on this role and supporting the efficiency of the system.
    regards,
    Brian

  4. “Recessions aren’t like thunderstorms… recessions are more like car crashes.”
    Wow! What a genius that journalist is. Now I understand economics!

    At first, I misread that as “car washes”. Clearly the wateriness of the metaphor was affecting me. Actually, that way it had the redeeming feature of at least being funny.

    “Good luck” and “good management” only explain part of Australia’s “good” economic performance. The other part is described by falsified statistical measures and selective blindness. Inflation and unemployment have been defined almost out of existence by changes in measurement methods. Hedonic calculations and rigged baskets for inflation measuring, statistical chaining (if that is the correct term) for GDP calculations and redefinitions of employment (like 1 hr a week is employed) all contribute to the deliberately falsified picture of our economy delivered by late stage capitalism (neoliberalism). It’s an exploitative and damaging system with falsified statistics. The falsified statistics are used to hide how we are being deceived.

    The selective blindness referred to above comes in with ignoring the demographic sectors of the economy in recession. I mean matters like youth and young adult unemployment and under-employment.

  5. Just Nine propaganda.

    Rip Fairfax, died some months ago when they sold out to Nine and some American fund that owns it.

    Lies are the new norm, there was no mistake.

  6. Re: mamikie says April 7, 2019 at 4:01 am

    There is so much wrong with that NYT article it boggles belief. Just a couple of fixes below:

    “A royal commission established to examine the industry found widespread misconduct, including abuses of customers, in a report issued this year.”

    Fix – A lame royal commission established to minimise FIRE damage scraped a bit at a token smidgen of failing glazing long visible from afar atop a dirty great iceberg, and culminated in recommendations for bau after anything but widespread findings. Mission accomplished, dirty great iceberg gloss restored.

    “During the global financial crisis, Australia suffered from plummeting demand for its products. But a nicely designed fiscal stimulus — combined with a falling Australian dollar and an assist from aggressive stimulus by China — helped the country regain its footing rapidly and avoid the mass economic pain found in so much of the world.”

    Fix – Rather, “a nicely designed fiscal stimulus” to allegedly be paid for by a nasty doubling down on then existing ponzi migration scam numbers, and as their is no other way owned since by the usurping unalternative face of government as “Big Australia”.

    More to the point in this piece of NYT bankster gloss not a single mention of the ponzi migration scam numbers running throughout the entirety of the period covered (plus of course the additional crushing weight of millions upon millions of ‘guest’ workers). And the inevitability that a ponzi will pop. Quite a remarkable thing to miss given that it has been the most prominent feature for the longest time! The article is utter tosh aimed right on the money at Wall St bankers. It surprises they left out any old reliable NYT references to WMDs, in this case, say, a tilt to “Westpac Makes your Days”. It sure does. All of a piece with subsidiary RBA. Suicide down, but hope looms.

  7. Millions upon millions of guest workers, Svante? That would be a minimum of 4 million guest workers or 16% of the population. That’s 40+ times the official number. This news is too important to keep to yourself. You should go to your local paper with the evidence. Maybe take a few photos of the new cities that have been built to house them.

  8. As Raymond Chandler put it:
    “Down these mean streets a man must go who is not himself mean, who is neither tarnished nor afraid. ”
    The heroic economist must walk the fine median line between Platonic irrelevance and compromised political engagement, while shunning modish fads and casting a long tail in his shadow.

  9. He’s one of the few that have any knack with it though, James. No one gets it right every time all the time. In the end, “human too human”, but it shouldn’t discourage a person from going the route less travelled and “having a go”. Many hard fights don’t go according to plan, when the negative people only have to block regardless of any truth, as with the defeatist Murdoch press, say.

    But the reward when you win one is exhilarating.

    Why should not wage and tax justice in a meaningful sense (for example) be a good engagement for a good mind; soul food.

  10. The chairman of Nine is Peter Costello so I expect Fairfax to be more frivolous and sensationalist, which could be the new standard.

  11. Pretty much agree with you Svante. Over that 28 year period, we’ve also sold outrageous amounts of public and private assets to help pay for the growth. We’ve taken on unprecedented levels of household debt. We’ve been fortunate to have a primary trading partner who’s an emerging superpower with the apparent ability to artificially define their own growth with apparent immunity to the consequences of unsustainable debt. What’s more, as someone who just spent 30 and 25 minutes to travel 800m into Melbourne’s CBD on Friday & Saturday evenings, I too am utterly frustrated with the level of migration and the neverending (interrupting) infrastructure works that just continually adds stress to my day or the never-ending requirement of tolls to pay for my constantly interrupted stressful commutes by road or overcrowded public transport.

    {end of rant}

    Re Banking: There actually were some real reforms, but they predominately happened before the BRC was even announced.

  12. I thought at the time the headline was so wildly off, it warranted a press council complaint. However, this sort of stuff they usually don’t have a problem with. That’s self-policing for you.

  13. Ronald says April 7, 2019 at 6:43 pm –

    Ronald, the situation is plain unless possibly one is living under a rock out in a central desert and steers well clear of even mainstream media. Possibly that is why you’ve not seen the contribution toward a new Canberra sprouting up every few years… I’ll concede a rounding error, Ronald, probably well on the down side, but your minimum put down at 4 million or 16% of total population seem too exact to credibly call it on the pea and thimble trickery. What do you know? Official numbers? For a shell game running now for 20 plus years! You might take a look at the numbers of 457…n work visa entrants, students!, backpackers, bridging visa holders, Pacific Islanders, Kiwi extended families, permanent resident entrants, family reunion entries, illegals, all the associated uncounted additional spouses also having right to work, …trending to Big Australia ∞? You might start with the 457s (~700k to ~1m+) and their additional working spouses, then work your way through all the categories known to be our ‘guest’ workers and used to bugger the wages, conditions, lifestyles, and environment of Australian resident citizens and get back to us with _the_ total including, of course, the unknowns. Better yet, take it to the sellout liblabluegreen’s Morrison, Shorten, and Di Natale to get it confirmed. Good luck.

  14. Savante, the figure of at least 4 million is yours. You said “millions upon millions”. For something to be “millions” it has to be at least 2 million. So “millions upon millions” would have to be at least two lots of 2 millions, so it would have to be at least 4 million.

  15. Ronald, I conceded the figure was rounded. Now where is your overall figure, and I accept due to the obfuscations and outright deceptions perpetrated by our ruling oligarchy and their wholly owned united political front that it too would have to be a rounded number. Unless, that is, you happen to be on the inside perchance?

  16. Fix – Rather, “a nicely designed fiscal stimulus” to allegedly be paid for by a nasty doubling down on then existing ponzi migration scam numbers …

    ‘Allegedly’? By whom was it alleged that the fiscal stimulus was to be paid for by a doubling of immigration?

    (I am assuming you actually mean ‘doubling’ and don’t actually mean ‘doubling down’, but feel free to correct me if I’m wrong.)

  17. Ronald, I conceded the figure was rounded. Now where is your overall figure, and I accept due to the obfuscations and outright deceptions perpetrated by our ruling oligarchy and their wholly owned united political front that it too would have to be a rounded number. Unless, that is, you happen to be on the inside perchance?

    There’s no way anybody, inside or outside (whatever that means), could have a figure exact to the unit.

    If roughly three-quarters of the people in Australia were born in Australia; and if roughly three-fifths of the people who were not born in Australia have become citizens; then, to the nearest tenth of a million, there would be 2.5m non-citizens in Australia.

    Do you have figures you think more likely to be accurate than those?

    Obviously, no matter what definition is used for ‘guest worker’, it can’t include all the non-citizens in Australia, so the figure for guest workers (however defined) would have to be lower than the figure for non-citizens, whatever that is.

  18. J-D,

    I have been caught out by that too. The fields should have some automated checks to save us from our own errors. I know we have had our blog disagreements but I sympathize with you over this issue. The saving grace is that this is a bit of an esoteric blog and attracts only decent people.

  19. J-D,

    we’ve heard only recently yet again from government ministers, government officials, and economists that the alleged reason for the lengthy period sustained without recession is the boost to GDP and commensurate government revenue due to sky high migration numbers. Apparently spending/borrowing is paid from revenue, no? Sure there were some savings Howard had been slow to fritter away, but not enough ongoing. Missives delivered from on high are mostly questionable, so I wrote ‘allegedly’. Also ‘allegedly’ paid, as debt in the wake of the GFC has mushroomed and along with it much national accounting trickery.

    I meant what I wrote, ‘doubling down’, in the plain old usual sense of the idiom as applicable*. It is what the Rudd government did. It raised Howard’s immigration and other visa numbers to staggering new heights to lift GDP in the wake of the GFC. Moreover, Gillard who said her government was to cut numbers actually trumped Rudd’s numbers, even going with ‘sustainable’ as cover whilst doing so. It was one ‘lie’ related to the tax base and spending in that electoral cycle that notably was happily let pass by the reigning oligarchy, lol. What, you didn’t note their actions, but accepted their words at face value?

    * 2nd sense here: https://idioms.thefreedictionary.com/double+down

  20. jd.encel@UNSWAlumni.com says: April 8, 2019 at 11:47 am –

    “If roughly three-quarters of the people in Australia were born in Australia; and if roughly three-fifths of the people who were not born in Australia have become citizens; then, to the nearest tenth of a million, there would be 2.5m non-citizens in Australia.”

    Nope. That’s out by not a tenth but by around 190% as not out by 100k but by 1,299,145.
    Per ABS Population clock: abs.gov.au/ausstats/abs%40.nsf/94713ad445ff1425ca25682000192af2/1647509ef7e25faaca2568a900154b63?OpenDocument On 8 April 2019 at 01:14:59 PM (Canberra time), the resident population of Australia is projected to be: 25,327,639.
    25327634 * 0.75 = 18995725.5; 25327634 – 18995725.5 = 6331908.5; 6331908.5 * 0.6 = 3799145.1

    3799145.1 – 2500000 = 1299145.1; 2500000 / 1299145.1 = 1.924342400244592

    I don’t get why you chose that as a starting number, and the respective fractions given above. Yet despite that calculus being erroneous the figure of 2.5m is somewhere near a reasonable estimate for guest workers (guesstimate?) offered below.

    “Do you have figures you think more likely to be accurate than those?

    Obviously, no matter what definition is used for ‘guest worker’, it can’t include all the non-citizens in Australia, so the figure for guest workers (however defined) would have to be lower than the figure for non-citizens, whatever that is.”

    Well, of course not all those, whether 2.5m or 3.8m (and _if_ your population fractions are correct), could be expected to be in the workforce as too young, too old, sick, etc. Yet despite such seemingly sensible reasons to mark down the numbers actually the numbers for what we are terming ‘guest worker’ are in the ball park.

    ‘mike mb’ comments on posts concerning population/immigration issues at Macrobusiness. Those comments often consist of an updated listing of numbers pertinent to the OP. I suggest as far as it goes for me that validity for mike mb’s numbers can be claimed as they are frequently posted publicly in a largish open forum where they could be utterly shredded but quite apparently have not been. Chosen at random – there are older and more recent postings by mike – see such a list of mike mb’s in comments below this article:
    https://www.macrobusiness.com.au/2018/08/bill-shorten-backs-big-australia/

    Bottom line there of mike mb’s there was:
    “Both parties need to shift to community views especially the new legal migrant PR/Citizens that it’s the 2.7 million TR & TVWI migrant guestworkers that is causing the national crisis.”

  21. 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.

  22. 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.

  23. 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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