Friday , March 29 2024
Home / John Quiggin / The average (median) worker does not earn the (arithmetic) average wage

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

Summary:
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 00 a year worse off under Labor” To spell it out, the trick here is that Bagshaw is looking at workers who earn between ,000 [the arithmetic mean of wages for full time workers} and 0,000. 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

Topics:
John Quiggin considers the following as important: ,

This could be interesting, too:

John Quiggin writes The budget’s thylacine-chasing days are over

John Quiggin writes The budget should have been a road to Australia’s low-emissions future

John Quiggin writes Two problems with Modern Monetary Theory

John Quiggin writes The simple, but unpleasant, arithmetic of a simple UBI

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.

John Quiggin
He is an Australian economist, a Professor and an Australian Research Council Laureate Fellow at the University of Queensland, and a former member of the Board of the Climate Change Authority of the Australian Government.

Leave a Reply

Your email address will not be published. Required fields are marked *