We will soon know the outcome of the Annual Wage Review 2013. The decision of the Fair Work Commission will increase the wage packet of the one in six workers who is only paid the prescribed safety net wage.
The size of the increase will attract headlines and editorial comment. But the longer term importance of the decision will be in its response to past minimum wage decisions. This year, more than ever, the Commission has been confronted with evidence that the safety net wage system has failed low paid workers and their families.
From December 2000 to December 2012 Average Weekly Ordinary Time Earnings increased by 74.4 per cent, far outstripping price increases of 39.5 per cent, due to increasing productivity and a dramatic change in the Terms of Trade. Even through the five years straddling the GFC, these average earnings increased by 26.6 per cent.
The rivers of gold that flowed into the Commonwealth Treasury in this period have funded the extension of family payments to the middle class, large tax cuts for high income earners and much needed increases in pensions.
The problem with changes in aggregates, such as average weekly earnings and Gross Domestic Product, is that they can hide counter-trends and growing inequality.
Despite increasing national wealth, the unemployed languish on $35.50 a day and the Commonwealth Government has made life much tougher for sole parents by their transfer from the Parenting Payment to the poverty-inducing Newstart allowance.
Wage inequality has grown greatly over the past decade or so. A worker employed on a wage rate of more than $767 per week had a real wage cut over the 12 years. All safety net-dependent workers were relatively worse off in 2012. A major cause of the current situation has been the failure of successive wage-setting tribunals to adjust safety net wages to reflect increases in community earnings.
A very troubling consequence of increasing wage inequality is that a growing number of people have fallen under rising poverty lines.
In December 2000 a family of four dependent on the Federal Minimum Wage, now called the National Minimum Wage, was $1.03 per week under the poverty line (set at 60 per cent of median disposable income). By December