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Source: MIL-OSI Submissions

Incomes fall for first time on record – Media release

26 August 2020

Median weekly incomes were lower in the June 2020 quarter than they were a year ago, down 7.6 percent to $652 a week, in the wake of COVID-19, Stats NZ said today.

The median is the midpoint, meaning half of workers earned above this amount and half earned below. Stats NZ uses the median value because it is less influenced by very high or very low earners than a mean average.

Median incomes from all income sources dropped for the first time since the series began in 1998. The measure captures income from wages and salaries, government transfers (such as New Zealand Superannuation and Jobseeker Support), and self-employment.

“A number of factors have contributed to this fall, such as people away from jobs without pay due to the COVID-19 pandemic and more people receiving government transfers,” labour market statistics manager Andrew Neal said.

“More self-employed earners were seen in lower income brackets as well, with median weekly incomes down almost $100 a week.”

The three income sources involved showed a mixed picture.

Median weekly earnings from wages and salaries increased 4.3 percent in the June 2020 quarter, along with income from government transfers, up 6.7 percent since 2019.

In contrast, self-employed earnings dropped 12.5 percent.

While earnings from wages and salaries appear to have risen, this is mainly because many people from lower-income industries reported no earnings. People who said they did not have any income were not included in the figures for wages and salaries, therefore lifting the median weekly income. However, they were included in the overall income measure.

More people receiving government transfers will also have brought the overall median down, as the amounts they receive tend to be less than those from other income sources.

Wages and salaries higher

Median earnings from both weekly and hourly wages and salaries increased over the year and broadly affected most age groups. Median weekly earnings rose $44 (4.3 percent) to $1,060. Median hourly earnings increased $1.47 (5.8 percent) to $27 per hour.

The increase in median wages and salaries is shadowed by a sharp rise in paid employees who reported no hours worked and no wage and salary income. The number of people in such circumstances increased 54,700 (75.3 percent) to 127,300. Of these, 76,300 said that it was due to COVID-19.

“People reporting the pandemic as their reason for being away from their jobs and not being paid were more likely to be from younger age groups, and the retail trade and accommodation industry,” Mr Neal said.

“Both these groups tend to have lower incomes.”

The rise in people away from work led to a lower number of wage and salary earners, especially among lower-income groups. The resulting compositional change meant that those remaining were more likely to be in higher income brackets, increasing the median income measure.

High-end incomes drop for self-employed earners

In the June 2020 quarter, median weekly earnings for self-employed people decreased $96 (12.5 percent) to $671. This is the largest percentage fall since the series began, with the second largest in 2008, when earnings fell $58 (8.6 percent).

Contributing to this was a fall in the number of people in the top one-fifth of self-employed people (who earned $1,918 a week or over), while the number of people in the bottom 40 percent of self-employed earners increased (those who earned $479 a week and under).

“Self-employed people may be working fewer hours, have reduced their takings from business cashflows, or have had less business, among other reasons,“ Mr Neal said.

Government assistance increases for young and old

The number of people receiving government transfers increased over the year, up 2.1 percent to 1,200,300 people in the June 2020 quarter. The median amount received rose as well, increasing 6.7 percent to $364 weekly. This includes any payments, such as Jobseeker Support, New Zealand Superannuation, and student allowances.

The largest increases occurred within the 20–24-years age group, up 8.6 percent to $267 a week, and the 60–64-years age group, up 14.5 percent to $335 a week. Following closely was the 65 years and over age group, up 3.2 percent to $371 a week.

Gender pay gap unchanged

The gender pay gap was steady at 9.5 percent in the June 2020 quarter and has remained relatively the same since 2017.

The gender pay gap shows the difference in median hourly earnings for men and women.

Hourly earnings from wages and salaries rose by a similar amount for both men and women. In the June 2020 quarter, median hourly wage and salary earnings rose $1.26 (4.7 percent) to $28.26 for men, and $1.07 (4.4 percent) to $25.57 for women.

Organisational gender pay gaps: Measurement and analysis guidelines has more information about gender pay gaps and how to calculate them for your organisation.

MIL OSI