Hundreds of thousands of working families in Australia, many earning more than the minimum wage, don’t have enough money to live a basic, healthy lifestyle – and are at risk of slipping into poverty.
That’s according to detailed research commissioned by the Fair Work Commission ahead of the Minimum Wage Case – it’s an Annual Wage Review to determine how much both minimum and award wages need to increase to help those working Australians make ends meet.
The study by the UNSW Social Policy Research Centre was designed to answer “one of the most difficult questions in social policy and welfare economics” – how much income is ‘enough’ to allow people to live a minimal, healthy lifestyle that would allow individuals to participate in society?
Working Australians don’t earn enough to make ends meet
During the September quarter last year, Associate Professor Bruce Bradbury and other academics from UNSW’s Social Policy Research Centre looked at a huge amount of information about the kinds of things that Australians spend their money on.
This included: what activities they undertake, what items they buy, how often they use health, childcare and public transport services, as well as how often (or whether) they eat out, have friends over for a meal, or take a family holiday.
Researchers then priced the lowest cost items available to calculate “minimal monetary weekly amounts required to achieve this standard.”
They added in the cost of rental housing and “extremely austere” discretionary spending, allowing for alcohol at a healthy level, average tobacco and gambling expenditure, a small travel allowance and a tiny allowance for eating out.
The ABC’s The Drum updated those household budgets using CPI figures for the December and March quarter.
Associate Professor Ben Phillips from the ANU Centre for Social Research and Methods then revised the income figures to take account of the increase in the minimum wage from July, and any changes to the Family Tax Benefits and other low-income payments and concessions received.
The conclusion — many working people and working families simply won’t have enough to make ends meet each week.
A single, low-income, full-time worker living in Sydney was deemed to receive $852 in total income, after tax.
That’s about 20 per cent higher than the minimum wage.
But that individual needed $945 for food, clothing, personal and household items, health, housing, transport, and an “austere” level of discretionary spending.
What happens when we adjust for kids?
A single parent working full-time with two kids will bring in $1,202 a week, and spend $1,119, leaving them with $83 left over.
However, a dual income-earning couple — one working full-time and the other part-time — will have $1,537 coming in a week, and $1,679 going out, which means the family is underwater by $142 a week.
And they will get further in the red, as the months go by and inflation continues to drive up the cost of everything from food, to rent, to transport.
“[The dual income family’s] income is well below the income that we would say is a minimum standard for a healthy lifestyle,” Dr Bradbury from UNSW says.
The inability for a household to earn enough money to live a healthy lifestyle, the research notes, extends to middle income earners in some cases.
In extensive focus group interviews, the UNSW researchers spoke to middle-income households to provide a comparison with the budget of low-income households.
They found that with spiking cost of living in Australia, there was “a lack of substantive differences in the budgetary choices, constraints and decisions between those on middle-incomes versus low-incomes.”
How are families stretching their dollars?
All these working people and families were using the same strategies to make ends meet.
These include: eating fast food rather than more expensive, healthier and homemade meals; parents skipping meals, haircuts, and buying new shoes in order to provide for their children; and not attending to their medical and dental needs.
Academic economists warn the financial pain associated with substandard living extents across many income groups and is growing in scale.
“Low-income renter households have always struggled but increasingly the burden is also being felt by low- and middle-income households with a mortgage,” Mr Phillips told The Drum.
Yet these households are nowhere near what advocates describe as the poverty line.
Where is the poverty line?
There’s no official definition of poverty in Australia, and no way of monitoring who is living in poverty or at risk of slipping into poverty.
The Australian Council of Social Service (ACOSS) has its own measure, which says a single adult earning about $489 a week is living in poverty.
The minimum wage from July is $882 per week.
Couples with children earning less than $1,027 a week, are considered below the line.
By that measure, more than 3 million Australians – or 13.4 per cent of us – live in poverty.
Should any of those low-income families have a breadwinner lose a job over the coming months, they will be surviving on welfare payments, far below that ACOSS poverty line.
From September, a single JobSeeker recipient will earn $369.95 a week, those on the Youth Allowance, will get $299.95 a week, and the Age Pensioners get $532.
‘I’m a Type 2 diabetic and I live on bread’
Fifty-two-year-old single mother Paulene Hutton from Morayfield, north of Brisbane, is living on JobSeeker.
She has a 12-year-old daughter that she home schools who has high anxiety, and a 30-year-old son on disability support.
Ms Hutton also works casually at a clothing shop.
The family recently moved house after being unable to pay the rent.
“I’m a Type 2 diabetic and I live on bread – and a couple of days before pay day I’m literally living on peanut butter sandwiches,” Ms Hutton told The Drum.
“It is making sure the kids eat properly, and they eat way better than I do, and that’s the way it should be – I would never sacrifice their meals for mine.”
She would love to sit down and have meals with her kids, “but if I sit down with a peanut butter sandwich, they will literally put food on my plate to make sure that I’m eating with them, so we don’t eat as a family anymore,” she explains.
“I don’t have the chance to sit down and have a good night sleep and have a good meal, because I’m too busy worrying about everything,” Ms Hutton told The Drum.
“The thought of what I’m going to do next month, the thought of a holiday – it just doesn’t exist.”
Professor of Public Policy at the Australian National University Sharon Bessell works with children aged between six and 17 years, and their families.
Ms Hutton’s story is all too familiar to her.
“We hear from children about the fact that they go hungry regularly,” Professor Bessell told the ABC’s The Drum.
“Many of them say they don’t want to tell their parents because they know their parents are hungry too and they don’t want to put more pressure on them.
“They don’t want their mums to stop eating.”
The average Australian living below ACOSS’s poverty measure is getting by on just $304 per week, after deducting the cost of housing.
“Do we want to be the sort of country that says we’re happy for people to work 50 hours a week – often in essential work like caring for others – but we’re going to let them live in poverty?” Professor Bessell asks.
“Or are we going to say we want a fair and just society and we’re going to ensure that people get paid an adequate salary in order to be able to support themselves, not to just survive?”
More financial stress for low- and middle-income earners can be expected
While the cost-of-living remains elevated, interest rates and rents are expected to keep rising.
Many economists are concerned this will place low-and middle-income households under more financial stress.
However, the Council of Financial Regulators (which includes the banking regulator APRA, and the Reserve Bank) said in a statement yesterday — aggressive [interest] rate rises have not triggered widespread financial distress [among households].
These households included “those on lower incomes (including many renters) and those with low savings buffers and high levels of debt relative to their income”.
The council added: “Most households are well-placed to manage the impact on budgets due to strong labour market conditions and sizeable saving buffers”.