More than one in four Australians say they are struggling to make ends meet with their current incomes, according to new ANU research.
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Price increases and the ability to absorb them is now a key factor in life satisfaction, the researchers found in the October 2022 survey from the COVID-19 Impact Monitoring series. That pressure is most acutely felt among the lowest 20 per cent of income earners, who are working more hours but earning less than they were before the pandemic. Half of this group say they are struggling financially.
It's a different story for the higher income earners. The top 20 per cent are the only group with a significantly lower level of financial stress than pre-COVID. Less than 5 per cent of this group say they are struggling.
Study co-author Nicholas Biddle said the real income of those at the bottom of the income scale had fallen relative to the middle, and they were also the hardest hit by inflation rises. That was likely behind the widening gap in life satisfaction between those at the top and those at the bottom of incomes.
"The people on those incomes have less of a buffer and less of a scope to dip into savings to cover those price increases," Professor Biddle said, noting that the kind of goods that saw the largest price rises in recent months tended to make up the majority of the household budgets of those on the lowest incomes.
The proportion of the 3500 survey respondents who said price rises was a very big problem (56.9 per cent) has increased significantly since the research began in January 2020 (37.4 per cent).
Average household income has fallen over the same period. In February 2020 it was almost $1800 per week. During the pandemic the highest peak was almost $1700 in November 2020. But the average in October 2022 was just $1629 in February 2020 dollar equivalents, a 3.1 per cent decline since April 2022.
In further signs of labour market shifts, Australians are working more hours on average in October (22.6 hours per week) than before the pandemic (21.9 hours), Professor Biddle said.
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"Clearly the cost of living is making it tough for many Australians despite our economy and society coming out of lockdowns and opening up," Professor Biddle said.
"As the government aims to increase the wellbeing of all Australians with its first budget, cost of living and financial stress should be high on their agenda."
A separate survey commissioned by Employment Hero found small business employee wages were outpacing inflation (wages increased 8.7 per cent compared to last year vs 7.3 per cent inflation). Canberra workers in small businesses were the highest paid with $38.30 median hourly rate in September, almost three dollars more than the next highest paid jurisdiction (NSW).