Land of the middle class?
Australia has long been labelled the land of the middle class but our recent analysis of the Australian Bureau of Statistics’ wealth and income data shows that this is less the case today.
Household income by quintiles
This infographic of annual household income by quintiles (20% categories, each comprising around 2 million of Australia’s 10 million households) shows the spread of total earnings. While the average household earns just under $110,000 per annum, the top 1 in 5 earn more than twice this (exceeding $260,000) and the bottom 1 in 5 take home around one-fifth of the average (a little over $23,000). This means that while the bottom fifth of households take home just 4% of all income, the top fifth get almost half (48%).
Highest fifth have incomes 12 times the lowest fifth
The top quintile earn almost as much as the other 80% of households combined. As a ratio, households earning in the highest quintile on average earn 11 times the average bottom quintile income.
Gini coefficient shows growing income divides
The Gini coefficient is a measure of income spread, with 0 being perfect equality and 1 being total inequality. The latest data shows that it is at 0.434, which is an improvement on what it was two years ago (0.446), but not as good as it was in the mid 1990’s (0.417). In the 20 years since, average household gross incomes have increased 66% from $66,196 to $109,668, today while over the same period, incomes of the top 1 in 5 households (highest quintile) have increased by 75% from $149,552 to $261,872.
Household wealth by quintile
Accumulated earnings are best represented by net wealth, and this is where the changing economic landscape of Australia is presented even more dramatically. While the average Australian household has a net wealth of $929,400, households in the highest quintile have an average net wealth more than three times this ($2,906,400). Households in the lowest quintile, however, are worth just a fraction of the average (4% of the average wealth, or $36,500). The lowest 20% own just 1% of the national private wealth while the highest 20% own 62% of the national private wealth.
Wealthiest 20% own 80 times that of the lowest 20%
The wealth of the highest quintile households, on average, is 80 times that of the lowest quintile households. While the average Australian household has seen wealth increase by 15% in the last 2 years (from $809,900 to $929,400), the highest fifth of households have experienced an average increase of 16% (an increase of $392,000). Only those in the fourth and fifth quintiles have a net household wealth ($949,800 and $2,906,400 respectively) that exceeds the average house price ($694,000), while the highest quintile households on average have a net worth exceeding 4 average Australian homes.