The Fall and Rise(??) of Household Incomes

Mary Mowbray, Neela Dayal

In December 1993 the Social Policy Agency published the Incomes Monitoring Report for 1981-91, which found that household incomes had fallen in real terms over the ten-year period.

This paper updates a portion of this study for the 1992 and 1993 years, and provides a summary of its findings. These show that real pre-tax and disposable incomes have fallen 15% and 10% respectively in the 1981-93 period, while median household income has fallen twice as fast. This has led to an increased level of income inequality among households, and the trends give some weight to the notion that the gap between the rich and the poor is getting wider. High unemployment has increased the number of beneficiary households, while the 1991 benefit cuts have further contributed to falling household incomes at the lower end of the distribution.

The overall effect is likely to have been a much reduced standard of living for many New Zealand households, but there is urgent need for further work on the actual standard of living associated with different income levels, to make explicit the social and economic implications of the documented fall in household incomes.