The Productivity Commission has found that between 2008 and 2018, the average real incomes of young people (aged 15-34) declined while older Australians’ incomes continued to increase.

“Young people have experienced a ‘lost decade’ of income growth. This means they entered the COVID-19 crisis already on lower wages and usually with limited savings,” Commissioner Catherine de Fontenay said. “Young people face discouraging prospects in a tough job market; and there is a danger they will simply give up on their aspirations as they take positions further down the jobs ladder,” she said.

The report Why did young people’s incomes decline? provides an in-depth analysis of how income sources evolved between 2001 and 2018 for various age groups, and why. It shows the main driver behind lower incomes for young people is falling wage income.

“It turns out that the ‘low wage growth’ story is essentially a story about people under 35,” Catherine de Fontenay said. “If we look at average wage growth for those over 35, it hasn’t slowed.”

The labour market became more competitive after the Global Financial Crisis (GFC), and young job-seekers bore the brunt of that. Firms offered lower starting wages. Young workers turned to jobs that did not fully use their qualifications and to part-time work.

The report shows that long term unemployment and underemployment rose after the GFC.

“The rise of part-time work meant that we did not see a large increase in unemployment, but many young people wanted to work more hours,” Catherine de Fontenay said.

Over this same period government support decreased for many students and young parents, because eligibility for Youth Allowance and Family Tax Benefits was tightened.

Government payments to the young are indexed to the Consumer Price Index and have not grown in real terms. In contrast Age Pension has increased because it is indexed to wage rates, which have grown faster than prices.

With incomes dwindling, more young people turned to their parents for support since 2008. Cash transfers increased and young people stayed at home longer. Living at home represents a sizable saving in terms of rent and other expenses.

“While these intra family transfers have helped cushion the fall in young people’s income, they have not been possible for all families, especially low income families,” Commissioner Catherine de Fontenay said.

The report Why did young people’s incomes decline? can be found at

(Source: Productivity Commission)

Comments are closed.