Wages and salaries are the major source of income for households (56%) The other main source of income include: - Business profits - Capital investments ^ (18% together) - Government pensions or allowances (10%) - Property income (11%)
Average weekly earnings are a good indicator of whether worker's income are rising or falling. Yet they do not take into account changes in the inflation rate. Real wages levels are a measure of purchasing power of money and are a good indicator of whether wages are keeping pace with inflation. (Refers to wether the wages increase you take out the inflation pressure in the increase in your wages and what money you have left).
Differences in wages outcomes
Different occupations require different levels of educations and skill. Wage rates reflect these differences. (e.g year co-ordinator has more responsibility compared to a normal teacher therefore the year co-ordinator will receive more money). Generally, occupations which require higher levels of education and skills receive higher incomes reflecting these differences. Occupations which have unattractive working conditions usually receive a higher rate of pay. Wages rates also reflect occupational mobility.
If a particular occupations has a mobile labour supple, wage rates are likely to be lower. However if the supply of labour is highly immobile wage rates will rise to attract workers into the profession. The highest paid workers are managers and administrators whereas, the lowest paid workers are clerical, sales and service workers. Wages rates may also rise to attract workers to geographically isolated areas. Highly productive labour units may also rise in their wage levels. Wage outcomes also reflect the capacity of a firm to pay increased wages.
Income varies over one's lifetime and is highest during the peak earning periods of ages 25 – 64. Income is at its lowest in the youth market between the ages of 15 – 19 due to the lack of skills, experience and qualifications of this group. Income also begins to decline after the age of 60 when most people enter years and take up pensions and other retirement incomes.
Disadvantages also exist in the form of the glass ceiling effect. This describes
The end result is that on average women still earn less than men. In 2011 on average women earned only two thirds of mens weekly wage. In 2010-2011 financial year male average income was $1214 weekly and for women it was $787 weekly.
Research has indicated that those born overseas (all countries, mostly those from english speaking backgrounds) earn more than those born in Australia. Yet, people from non-English speaking backgrounds (NESB) have lower incomes than other Australians. Income levels also appear to be directly related to the length of residence in Australia. The the ethnic group with significant disadvantages with regard to incomes and employment opportunities is Aboriginals and Torres Strait Islanders.
Non-Wage outcomes include:
- Sick leave - Holiday leave- Superannuation - Company cars - Laptops - Child care - Gym memberships - Bonuses - Shares in the company - Study leave - Family leave The role of these “non-wage” outcomes is to: - Provide tax advantages for employees- improve loyalty to the employer - Provide flexibility for employees in their working day - Encourage the development of further skills
Review Questions page 141
Outline the impact of the following changes on real wages: a. Nominal wages rises faster than inflation.Real wage rate would increase. b. Nominal wages rise more slowly than inflation.Real wage will decrease. c. Nominal wages and inflation rise at the same rate.You will not be able to make money but instead lose money.
Account for the difference in wages outcomes between occupation;...