Key Takeaways
- Many middle-class Australians, despite their relatively high incomes, are struggling to make ends meet and are experiencing food insecurity.
- The cost of living, particularly housing and essential items, has increased significantly since 2020, outpacing wage growth.
- According to Food Bank Australia, one in five households earning $91,000 or more experienced food insecurity in the past 12 months.
- To afford the median rental or mortgage repayments in Australia, individuals would need to earn over $100,000 per year, with some cities requiring even higher incomes.
- The divide between generations is also a significant issue, with research showing that people born in the 1990s are the first generation to not have higher incomes by their 30s.
Introduction to the Problem
Jess Townsend, a lawyer earning $90,000 per year, is an example of a middle-class Australian struggling to make ends meet. Despite her relatively high income, she has had to visit a food bank and is unable to save. Her situation is not unique, as many Australians are living on a financial precipice. The cost of living, particularly housing and essential items, has increased significantly since 2020, outpacing wage growth. According to the AMP chief economist, Shane Oliver, average grocery prices have increased by 21% since 2020, while average wages have only increased by 16%.
The Impact of Housing Stress
The connection between housing stress and food insecurity has become more pronounced, with 48% of renters experiencing food insecurity. The rate of food insecurity among households citing "changes in my household/living arrangements" as a reason for their food insecurity has also increased. Exclusive data from real estate data firm Cotality shows that there is no capital city in Australia where someone making under $100,000 would be able to afford the median rental or mortgage repayments without paying more than 30% of their wage. This suggests that the housing market is out of whack, with a small group of wealthy buyers driving prices up.
The Need for a High Income
To afford the median rental or mortgage repayments in Australia, individuals would need to earn over $100,000 per year, with some cities requiring even higher incomes. For example, in Sydney, individuals would need to earn around $230,000 per year to afford the median mortgage repayments. This is significantly higher than the median income in Australia, which has stagnated in the past decade. According to a report by Per Capita, the purchasing power of wages after inflation has only increased by 2.6% over the past 10 years.
The Divide Between Generations
The divide between generations is also a significant issue, with research showing that people born in the 1990s are the first generation to not have higher incomes by their 30s. This is a concerning trend, as it suggests that younger generations may not be able to achieve the same standard of living as their parents. Peter Whiteford, a professor in the Crawford School of Public Policy at the Australian National University, notes that living standards have not significantly improved since 2009.
The Reality of Living Paycheck to Paycheck
For many Australians, living paycheck to paycheck has become a reality. Josh, a Sydney resident, is an example of someone who is working multiple jobs to make ends meet. He earns a combined annual income of between $80,000 and $90,000, but still struggles to afford his rent and living expenses. He often uses the Addi Road food pantry to make ends meet, and feels like he is "working harder and harder and harder to just tread water." His situation is not unique, with almost 1 million people in Australia now working two jobs to keep up with the cost of living.