How equal has wage growth been over the last 10 years?

Minimum / Living / Median / Average Wage

Posted on 10 May 2019

How does growth in the minimum wage and living wage stack up against growth in the median wage and average wage in New Zealand over the last 10 years?

Let's start with establishing what pay rates were like in 2008 and in 2018:

Minimum Wage Living Wage Median Wage Average Wage
2008 $12.00 * $18.80 $21.90
2018 $16.50 $20.55 $24.93 $29.34
* There was no official concept of Living Wage in New Zealand in 2008 so we can only present living wage figures from 2013 on.

The data is better represented in a chart where we can see the relative differences between the minimum wage, living wage, median wage and average wage, and how they have changed over time.

Tentative data for 2019 has also been included where available, though at the time of writing there are still several months left in 2019.

Growth of Minimum, Living, Median and Average Wages 2008 - 2019

We can see that by and large, the median wage is about 50% higher than the minimum wage, and the average wage is another 15-20% higher still. Wage growth here looks relatively equal except perhaps in 2019.


Trends can be more easily discerned by standardising each set of data to a common scale. The following two charts show wage figures standardised to (a) 2013 levels, and (b) 2008 levels.

(a) Growth of Minimum, Living, Median and Average Wages
Standardised to 2013 levels.

2013: The year in which living wage was introduced.

(b) Growth of Minimum, Living, Median and Average Wages
Standardised to 2008 levels.

Living wage data was extrapolated back to 2008 for this chart.

Now we can see more clearly that, with the exception of the living wage, wage growth was fairly consistent and equal from 2008 until about 2013-2015, but since then there has been stronger growth in both the minimum wage and the average wage.


How does wage growth compare with house prices?

Here is the same set of charts, but with Auckland and New Zealand median house prices added in to illustrate the relatively huge growth of capital values when compared to employment income.

Minimum Living, Median and Average Wages vs House Prices

$median house price (left axis)
$hourly earnings (right axis)

Growth of Minimum, Living, Median and Average Wages, vs House Prices

Standardised to 2013 values

Growth of Minimum, Living, Median and Average Wages, vs House Prices

Standardised to 2008 values

Those charts show a stark difference between the rate of employment wage growth and relatively massive increase in house prices.

Interestingly, the charts also show a sharp change in trend from 2016/2017 as house price growth has eased while wage growth is accelerating upwards.

It's evident from the charts that recent wage growth has been concentrated at the top and bottom ends. There has been strong growth in the minimum wage over the last two years, and a higher increase of average wage vs median wage indicating that salaries at the top end are pulling the average up faster than increases in the median wage.

Summary:

Over the last 10 years in New Zealand, growth in the median wage has been outstripped by growth in the minimum wage and in high wages. There have been some winners at higher levels of the pay spectrum, but workers on the minimum wage have seen the highest percentage increase. However across the board, growth in earnings from employment has not kept up with house price inflation.


Related information

Earnings data was sourced from Statistics New Zealand. House price data was sourced from REINZ. Examples presented on this page are provided for informational purposes only and do not constitute financial advice.

2 Comments

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We need a higher living wage in Auckland.

What about Beneficiaries?