Tuesday, 8 March 2016

The kids are all right: NZ Edition

More than a few folks have emailed me the latest from The Guardian on the coming intergenerational war. Youth incomes have been going backwards in too many countries.

And so I pulled together what I could quickly get out of Stats NZ Census data.*

Here's what by-age median incomes look like in NZ, going back to 1991. It's all CPI adjusted to Q1 of the Census year, assuming a Q1 2013 final price. So $2013.

The x-axis has age cohorts. Note that the gap between the 2006 Census and 2013 is larger than usual due to the 2011 earthquake which displaced the normal census year; the great recession also fell during that period.

There was substantial real income growth from 2001 to 2006. Real median Census incomes between 2006 and 2013 only shows growth for old people. There's not been particular decline for youths, and certainly no decline over the period since 1991, with one exception. 15-19 year olds earned far more in 1991 than they did in any later period, with a sharp drop from 1991 to 1996 (which I'd put to increasing tertiary enrolment) and another sharp drop from 2006 to 2013 (which I'd put to the abolition of the differential lower youth minimum wage and consequent labour force exits).

Note further that New Zealand Income Survey data shows reasonable increases in by-age incomes from 2013 to present. 20-24 year olds had total real income growth of 11.8% from 2013 to 2015; 40-44 year olds only saw real income growth of 4%.

New Zealand Income Survey, median incomes by age, $2013.

New Zealand isn't doing too badly compared to the international experience. But the international experience isn't good. And New Zealand has a bad habit of just assuming that whatever's reported in the Guardian about the US or UK is also true here. Youths locked out of housing by the Auckland gerontocracy could be excused for not noticing their very real growth in real incomes as compared to the 1990s; it's all being eaten up by housing costs.

My worry is that imported narratives of stagnant wages (again, note the substantial increases 2013-2015 in NZ Income Survey data, contrary to the international experience) fuel demand for bad policy. The narratives are appealing here because it is easy to think back to the houses your parents could afford, and conclude you're worse off. But adults in their early thirties have real median incomes more than $16,000 higher than they had in 1991.

It's a problem with housing.

* You'd think it would be easy to get these kinds of long term series. I'm probably just bad at it, but I had to pull it out of a few different Census files, and I can't quickly find the 1986 census. The long term series don't have age-breakdowns, so it has to be culled from each Census. A job for another day.

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