Friday, 2 October 2015

Income confusion

Today's NZ Income Survey numbers have me perplexed. I've emailed asking them what's up, but here's my puzzle. Maybe one of you can help me out.

I keep median and average weekly earnings from salaries and wages floating around in my head because they're important touchstone figures that everybody working in policy should know. They give you a sense of proportion for things. The number I had floating around in my head for average weekly earnings from salaries and wages among salary and wage earners was $991. And that is the correct 2014 figure. Median was $863.

This year's release has a population rebasing taking into account the 2013 Census and they urge that current figures not be compared to prior ones because they've rebased things. Ok, fair enough.

This year's release has median weekly income from salaries and wages at $882, which is up $19 from last year. Last year's median figure was $863, so whatever's going on in the rebasing didn't affect the median figures. $863 + $19 = $882. A 2.2% increase.

The headline figures didn't include averages though, and they usually do. For those, you have to drill over to Tab 5 of the spreadsheet. Average wage and salary income for those in paid employment was $891. And they do not provide a rebased figure for 2014.

Whatever happened in the rebasing didn't affect median earnings at all, but knocked average earnings down by over ten percent. Average earnings didn't drop: all the hourly rates and such are increasing, and the average earnings from salary and wages across the entire population (not just those in employment) is up, but they don't give the version of average earnings that would allow a straight comparison of averages among those in paid employment.

I'm probably missing something obvious. But I just don't buy that there's only a $9 difference between median and average weekly earnings. If there is, well, even I've been massively overestimating the amount of inequality in New Zealand - and I've been complaining about other folks overstating it.

Update: StatsNZ replies:
"Regarding to your query, median weekly income from wages and salaries for those receiving income from this source was at $882 in the June 2015 quarter, compared with $863 in the June 2014 quarter.
The average was at $1,021 in the June 2015 quarter (which can be found in the supplementary table 4), compared with $993 in the June 2014 quarter.
The figures above are calculated based on wage and salary earners only.
 However, figures in table 5 are calculated based on the people earning income from either wages and salaries or self-employment, or both.
As the population is different, the average of $891 is different, compared with $1,021 mentioned before.
 Hope this could help answer your question."
So it's the relatively low earnings of those reporting self-employment that drag down the Table 5 averages.

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