Did baby boomers really have it harder?
In the intergenerational debate surrounding the relative challenges faced by the various generations over the decades, much of the context is often lost in translation.
Through the passage of time and the cumulative impact of inflation, the context of earning $3 an hour at a part time job in say 1981 is largely lost.
That is unless you have something of an economic Rosetta Stone with which to translate that into today's terms, so we can better understand one another.
Today, we have an attempt at just that.
In the first interactive chart, you can click a year on the chart and it will tell you what median full-time earnings were at that point.
When put into context with the latest median full-time earnings figures from the ABS, in which the figure is now $1,700 per week, it provides a degree of clarity on here someone's earnings stood in a given year and a means of extrapolation for what they might look like today.
In the second, it shows the evolution of a cost of a basket of goods.
It starts 50 years ago in 1975 and illustrates over time how much the cost of $1 worth of goods has risen relative to inflation. It also provides a means of comparison to contrast the relative cost of living in a certain year with the present.
Earnings evolution
Before we get into today's numbers, a few details on limitations are required. Median full-time earnings as a metric is not directly equivalent to wages growth. The ABS Wage Price Index tells you how much growth there is in wages in the same roles, year after year, decade after decade.
Meanwhile, median full-time earnings tell you what the person in the very middle of the full-time earners is making over time, so it doesn't account for changes in workforce composition or education levels over time.
Back in 1975, the median full-time worker earned $129 per week, since then it has risen to $1700, roughly 13.6 times what it was 50 years ago. For men full time earnings are 13.3 times higher than they were in 1975, for women 15.1 times higher.
Cost of living
The scope of today's analysis for the cost of living also begins back in 1975. Back then the cost of the basket of goods and services that define the consumer price index was just 11.4 per cent of its cost today.
In the decades since, the declining purchasing power of a dollar has not been a linear process, with bouts of high inflation doing significantly more damage than periods of lower than historic inflation, such as the years in the run up to the pandemic.
Overall, the cost of the ever-changing basket of goods and services that make up the nation's consumer price index has risen by 8.7x in the last 50 years.
A difference in perspective
One expression of the disparate viewpoint on the cost of living over time was recently exemplified by a survey performed on behalf of comparison website Finder.com.au.
The survey concluded that Baby Boomers believed they needed an income of $106,747 to live comfortably and that the figure continued to rise through subsequent generations to Gen Z, who believe an income of $198,880 is required to live comfortably.
In some ways, this is effectively a graph of declining housing affordability over time.
The last of the Baby Boomers passed through their prime first home buying years before broad based affordable housing came to an end shortly after the turn of the millennium and things have continued to deteriorate for each subsequent generation.
Putting it all together
Bridging the gap between our collective perceptions of incomes and the cost of living over time can be challenging, but using data and tools like today's can provide a degree of clarity and perhaps a more solid point for comparison.
It's easy to get bogged down in the perception that people today earn up to 15x more in nominal terms than their fellow Australians did almost 50 years ago, when the ABS series on median full-time earnings began with a high degree of data collection consistency.
But once you adjust incomes from any point in history to where that stands versus today's norms, all of a sudden, the gap narrows dramatically and it becomes clear that perhaps things are far less disparate than it first appears.
The same is true but to a slightly lesser degree when adjusting historic costs for the rate of headline inflation.
Ultimately, the more the nation's various generations understand the circumstances that the other's faced in the past or present, the more we can find common ground with which to build bridges and perhaps place a greater focus on the issues facing the nation, rather than the perceived differences that often lead to divide us.
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