Gen Ys continue to enjoy the fastest-growing standards of living compared to older generations, according to new modelling that confirms overall income growth slowed in the March quarter.
In findings that undermine oft-heard complaints from younger generations that they are not winning a fair share of the economic pie, the research shows households under 35 saw living standards surge 58.4 per cent between 1988 and 2011.
By contrast, those aged 35 to 49 enjoyed an increase of 52 per cent, the smallest gain, with those aged 50 to 65 enjoying real growth of 54.9 per cent.
Canberra University’s Ben Phillips, who heads the SAS-NATSEM quarterly household budget report, said the boost to younger generations was largely driven by the fact that cost of living pressures are lower, while younger families have also undergone a significant shift towards dual-income households.
Big societal shifts
Compared to several decades ago, today’s women also tend to be more educated, opening access to higher paying jobs.
“These are big societal shifts over the last 30 to 40 years,” he said.
The Grattan Institute last year published a major research paper that suggested younger Australians were likely to be the first generation to have lower standards of living than their parents without curbs to overly generous pension and healthcare services.
The Grattan paper found that while most age groups were wealthier than they were in 2003, the average 55 to 64-year-old household was $173,000 better off in real terms by 2011-2012 compared to a household of the same age eight years later.
Part of that was due to rising house prices, but also because of increased spending on health and aged care, which tends to flow to older cohorts.
“In terms of assets, boomers are more likely to own a house than younger generations.
“What we’re looking at here are incomes and cost of living changes.”
Mortgage rates for the lucky few
“While it may be difficult to get into a house, those that do may be benefiting from record low interest rates,” Mr Phillips said.
Overall, the SAS-NATSEM modelling shows living standards rose just 0.2 per cent in the three months through March 31 and 1.2 per cent from a year earlier.
The increase was driven by the fact that while household incomes were weak – up just 1.9 per cent for the year – cost of living growth was just 0.7 per cent for the same period.
That translates into a gain for the average Australian household of $897, with the biggest increase recorded in the Northern Territory at $3535.
The average ACT household was $697 a year worse off, the nation’s worst performance.
“[Overall] incomes are still rising but not by as much as they used to, but the cost of living isn’t going anywhere.
“There’s a lot of talking down of the economy… but this is not too bad a result after 20 years of incredible growth. To still be heading in the right direction is a good outcome.”