RESEARCH PAPER SERIES, 2019–20              30 July 2019

Findings of the 14th Annual Statistical Report of the HILDA Survey

Geoff Gilfillan

Statistics and Mapping

Executive summary

The latest Household, Income and Labour Dynamics in Australia (HILDA) Statistical Report 2019 shows earnings from work in Australia for men have virtually plateaued in real terms since 2011, while earnings for women have increased slightly. The report also shows median household incomes have fallen slightly in real terms since 2009, and income inequality is largely unchanged over the whole length of the period that the survey has been conducted (from 2001 to 2017).

Commuting times are now longer, households are less reliant on welfare payments, new retirees aged 65 years and over are less likely to be on the Age Pension, and workers are more likely to be engaged in non-standard employment.

Men are more likely to be spending a bit more time on house work and child care than they did in the early 2000s while women are spending a bit less time on house work than they did but more time on child care. Men are more likely to experience conflict between work and spending time with family than women but the rate of conflict is falling over time—perhaps due to them being less likely to work very long hours. Young Australians are much more likely to be living in the parental home for longer, which is partially driven by higher rates of participation in education.

Contents

Executive summary              1

Introduction              3

Background              3

Key findings              3

Increasing use of paid child care for children under the age of five              3

Slowing growth of household incomes              3

Little change in income inequality              3

Contrasting growth and decline in household incomes in regional areas              4

Evidence of intergenerational income mobility              4

Declining relative income poverty              4

Declining welfare reliance              5

Labour market earnings              5

Use of salary sacrificing              6

Increasing prevalence of non-standard employment              6

Increased time spent commuting              6

Earning characteristics of couple households              6

Time use by men and women in couple households              6

Conflict between time spent at work and being with your family              7

Family formation and labour market performance of young adults              7

Prevalence of serious illness              7

Illicit drug use              8

Introduction

The results of the 14th Household, Income and Labour Dynamics in Australia (HILDA) Annual Statistical Report 2019 were released on 30 July 2019. The survey is a nationally representative longitudinal study of over 17,000 Australian individuals residing in approximately 9,500 households that has been undertaken since 2001. The release of 2017 data makes this the seventeenth wave of data releases. The survey is funded by the Australian Government Department of Social Services and managed by the Melbourne Institute at the University of Melbourne.

Background

The HILDA survey enables analysis of a range of social, demographic and economic issues but perhaps its most distinctive feature is its longitudinal nature. Questions are asked of the same individuals and households year every year which allows researchers to examine how aspects of their lives change and transition over time. This enables the observation of the dynamics of health and education of individuals, their labour market experiences and the income they receive. In particular it allows researchers and policy makers to observe whether some individuals experience persistent relative income poverty and reliance on welfare. HILDA data also enables analysis of labour market transitions, income mobility and earnings.

The survey sample has been supplemented at various times due to attrition of respondents (i.e. the survey is topped up to make up for those who no longer wish to be interviewed). The survey has also been topped up to include more migrants to make the sample and survey results more representative of the changing nature of the Australian population. Due to logistical issues the survey sample does not include Indigenous and Non Indigenous Australians living in very remote communities.

Key findings

Increasing use of paid child care for children under the age of five

The use of child care is much higher for children not at school compared with school children aged five to 14 years. Over half of couples with children not yet at school used paid child care compared with just under a fifth of couples with children at school.

Between 2011 and 2017 the use of paid child care by couple parents for children not yet at school increased by 10.1 percentage points to 53 per cent. The use of child care by single parents with children not yet at school showed similar trends between 2011 and 2016 but fell markedly in 2017.[1]

Slowing growth of household incomes

Between 2001 and 2009 median household annual disposable income grew by $19,432 or 31.7 per cent in real terms[2] but between 2009 and 2017 median household annual disposable income fell slightly by $542 or 0.7 per cent.

Little change in income inequality

The HILDA Survey indicates there has been little net change in income inequality between 2001 and 2017.

The Gini coefficient—which is a common measure of overall inequality—has remained between 0.29 and 0.31 over the entire 17 years of the HILDA Survey. There has been a very slight increase in inequality more recently using the Gini coefficient measure—from 0.294 in 2015 to 0.302 in 2017.[3]

Contrasting growth and decline in household incomes in regional areas

Median household equivalised income for Perth residents outstripped other capital cities between 2010-11 and 2014-15 but contracted sharply in 2016-17 to be just above Brisbane and Melbourne.

Median household income in the Australian Capital Territory fell dramatically between 2012-13 and 2014-15 and has not recovered since. Median household income in the Australian Capital Territory was the equal of the Northern Territory in 2016-17 and was around $20,000 more than the median for the next highest jurisdiction which is Western Australia. The rest of the states have experienced relatively stable household incomes between 2008-09 and 2016-17 after recording steady growth in the previous seven years.

Evidence of intergenerational income mobility

The Melbourne Institute undertook some analysis of the economic fortunes of people who were aged 15 to 17 years of age in 2001 and aged 32 to 34 years in 2017 to establish whether there is some link between their eventual financial outcomes and the economic circumstances of their parents.

The researchers examined the outcomes for children whose parents were in the bottom 20 per cent of the one year parental income distribution in 2001 (when the children were aged 15 to 17 years) and found that 34.4 per cent were in the bottom 20 per cent of the income distribution for their age in 2017 (when they were aged 32 to 34 years) but just under a quarter (23.8 per cent) were in the top 40 per cent of the income distribution. In other words over a third of this group were in the bottom 20 per cent of the income distribution in 2017 but just under a quarter had progressed to be in the top 40 per cent.

For those children whose parents were in the top 20 per cent of the parental income distribution when they were aged 15 to 17 years, less than ten per cent were in the bottom fifth of the income distribution for their age group when they were aged 32 to34 years in 2017, And just under a third (32.6 per cent) of this group were in the top 20 per cent of the income distribution. These outcomes provide evidence of the link between parental income and the income of children later in life but also some evidence of income progression for those at the bottom of the income distribution.

Declining relative income poverty

The proportion of the population experiencing relative income poverty[4] has fallen from 12.4 per cent in 2007 to 10.4 per cent in 2017. This outcome is partly due to the clustering of many welfare recipients close to the relative income poverty line. Small movements in government allowances can move recipients above the line.

Poverty rates are much higher for single elderly persons. Poverty rates for this group declined steadily between 2009 and 2015 but started rising again in 2016 and 2017. It should be noted that these poverty measures do not account for housing costs. Elderly people are more likely to own their house than younger people, and the income poverty measure does not account for in-kind income provided by owner occupied housing or the rent that home owners would have to pay for their housing if they did not own it.

In 2017 the child poverty rate for dependent children under the age of 18 years was 8.2 per cent.

In 2017 the poverty rate for children in single parent households was almost four times the poverty rate of children in couple parent households at 19.2 per cent compared with 5.3 per cent.

Just over 2 per cent of men and women aged between 18 and 55 years had experienced poverty for seven or more years between 2008 and 2017. A quarter of men and 27 per cent of women in this age group had experienced poverty for at least one year between 2008 and 2017.

For persons aged 65 years just under, two thirds of men and three quarters of women experienced at least one year in relative income poverty between 2008 and 2017. Further, over18.2 per cent of men in this age group and 22.3 per cent of women experienced relative income poverty for seven years or more between 2008 and 2017. As noted above these results are influenced by housing costs not being taken into account.

Declining welfare reliance

Single parents have much higher reliance on welfare than other household types but their rates of reliance fell considerably from 45.3 per cent in 2002 to 29.7 per cent in 2014 but the proportion that are welfare reliant has risen since to 33.5 per cent in 2017.[5]

The proportion of couples with dependent children who were welfare-reliant fell from 8.7 per cent in 2002 to 4.2 per cent in 2017, while welfare reliance for couples without dependent children fell from 11.1 per cent in 2002 to 5.5 per cent in 2017.

In contrast, welfare reliance among single women increased from 14.6 per cent in 2008 to 16.6 per cent in 2017 while for single men it rose from 12.0 per cent to 16.3 per cent.

Of those people aged 18 to 55 years who received income support in 2008 around 8.6 per cent of men and 10.7 per cent of women in this age group received income support each year for the next ten years through to 2017.

In 2003, 60 per cent of people aged 65 years and over were reliant on income support but by 2017 this proportion had fallen to 51 per cent.

The proportion of men aged 65 years and over that were new retirees and on the Age Pension has fallen from 75.7 per cent in 2001-03 to 60.0 per cent in 2016-2017. For women in this age group the proportion that were new retirees fell from 73.8 per cent in 2001-03 to 54.9 per cent in 2016-2017.

Labour market earnings

Between 2001 and 2017 average weekly earnings of men working full-time increased by 20.9 per cent which compares with growth of 24.0 per cent for women working full-time.

Measures of earnings inequality also show a convergence between full-time employee male and female earnings distributions in recent years.

Long term trend findings mask more recent events which show average weekly earnings for male employees working full-time have been stable or fallen slightly in real terms in succeeding years between 2011 and 2017. In contrast earnings for women working full-time have continued to grow.

Use of salary sacrificing

Salary sacrificing can be used for increasing superannuation balances (59 per cent of all salary sacrificing in 2017), purchasing a motor vehicle (15 per cent), housing (19 per cent), household and personal bills (11 per cent) and other purposes (16 per cent). A slightly higher proportion of employees salary sacrificed in 2017 (15.9 per cent) compared with 2010 (14.4 per cent), but the mean value that they have salary sacrificed has fallen in real terms from $8,440 to $6,787. This finding suggests that households and individuals are deciding to invest less in items such as superannuation perhaps as a result of slowing growth in personal and household incomes.

Increasing prevalence of non-standard employment

The prevalence of non-standard employment (which includes people on fixed-term contracts, casual employment, labour hire employment and permanent part-time employment) increased for men from 31 per cent in 2008 to 37 per cent in 2017, while increasing from 57 per cent to 61 per cent for women.

Much of the increase for men was driven by an increase in prevalence of casual employment while the increase for women was mainly driven by an increase in the prevalence of permanent part-time work and to a lesser an extent an increased prevalence of casual employment.

In terms of age there has been a notable increase in non-standard employment among people aged 15 to 24 years between 2008 and 2017 and a corresponding decline in prevalence of non-standard employment for those aged 65 years and over. Prevalence is much more stable for other age groups.

Increased time spent commuting

There has been a notable increase in the time spent commuting in Australia from an average of 48.8 minutes per day in 2002 to 59.9 minutes per day in 2017. Of the major capital cities Sydney has the highest average commuting time at 71.1 minutes in 2017 which compares with 60.6 minutes in 2002.

Earning characteristics of couple households

Dual earner couple households have grown as a share of all working age couple households from 56 per cent in 2001 to 66 per cent in 2017. In 2017 around 18 per cent of working age couple households were characterised by only the male partner being employed (compared with 22 per cent in 2001), 9 per cent of couple households were characterised by only the female partner being employed and 8 per cent were households where neither partner was employed.

The proportion of dual earner working age couples where the female partner earns more than the male partner has increased from 22 per cent in 2001 to 25 per cent in 2017.

Time use by men and women in couple households

There has been a slight increase in house work undertaken by men in 2015 to 2017 compared with 2002 to 2004 in households with dependent children where there is a male breadwinner, households where there is a female breadwinner and households where the paid work undertaken is approximately evenly shared. The data also shows a commensurate small decline in house work undertaken by women in these households.

In couple households with dependent children where earnings were approximately even women spent on average 23.1 hours on housework in 2015-17 compared with 16.1 hours for men. Women in these households spent on average 18.2 hours looking after children compared with 11.1 hours for men. Women spent a lot more time engaged in these activities than men in households where the male was the breadwinner (14 more hours doing housework and 15 more hours looking after children) in 2005 and 2017. Women in households where they were the breadwinner also spent more time than men on these activities (five more hours on housework and eight more hours on child care).

Both men and women spent more time looking after children in 2015 to 2017 compared with 2002 to 2004 in households where there was a female breadwinner or they both worked. Men in households where they were the only bread winner show only a very slight increase in time spent looking after children.

Conflict between time spent at work and being with your family

Men tend to report higher average scores for work-family conflict than women. But interestingly the average work-family conflict score for men has been trending down since 2001 while scores for women have been trending upwards so that by 2017 there was a much smaller gap between the two.

There is a clear positive relationship between working longer hours and work-family conflict. Those working 55 hours per week report a 2 point higher work-family conflict score than those working 15 hours per week or less. And those working night or irregular shifts of work report much higher scores. Perhaps a reason for the decline in the work-family conflict score for men is related to the decline in prevalence of longer working hours for men over the past two decades. According to ABS Labour Force survey data the proportion of employed men working 60 hours or more per week has fallen from 12.7 per cent in June 2000 to 8.1 per cent in June 2019.

Family formation and labour market performance of young adults

There is an increasing incidence of young adults living in the parental home. In 2017 around 56.4 per cent of young men aged 18 to 29 years lived with their parents compared with 47.2 per cent in 2001. A more significant shift is observed for women in this age group with 53.9 per cent living with their parents in 2017 compared with 36.5 per cent in 2001.

The biggest shift has been in the 22 to 25 years age group with around 59 per cent of women in this group living with their parents in 2017 compared to around 31 per cent in 2001. Similarly around 57 per cent of men aged 22 to 25 years were living with their parents in 2017 compared with around 41 per cent in 2001. Young adult women were leaving home on average at 24.2 years of age in 2017 which compares with 22.1 years in 2001.

Young adults aged 18 to 29 years living at home were slightly more likely to be unemployed than all young adults—8.3 per cent versus 6.6 per cent.

Part of the reason for the delay in departure from the family home is participation in education. For example, around 24.6 per cent of young women aged 22 to 25 years were participating in education in 2017 compared with 13.8 per cent in 2001.

Prevalence of serious illness

There are some gender differences in terms of reported prevalence of particular types of diseases. Men aged 55 years and over were more likely to report Type 2 diabetes than women in this age group in 2017 (15.2 per cent versus 10.3 per cent), heart disease (16.6 per cent versus 10.0 per cent) and any type of cancer (9.1 per cent versus 5.6 per cent). Women in this age group were more likely than men to report arthritis or osteoporosis (45.9 per cent versus 27.6 per cent) and depression or anxiety (16.5 per cent versus 11.5 per cent). Young women aged 15 to 34 years were the group most likely to report depression or anxiety (at 20.1 per cent).

Over an eight year period the illnesses that have the highest chances of mortality for people aged 55 years and over were Type 1 diabetes (36.8 per cent mortality rate), a serious circulatory condition such as a stroke (33.5 per cent), chronic bronchitis or emphysema (31.7 per cent), heart disease (30.3 per cent) and any type of cancer (29.4 per cent). Males aged 15 to 34 years recorded over a five percentage point increase in prevalence of depression to 11.2 per cent between 2009 and 2017. Women in the same age group recorded just over a seven percentage point increase to 20.1 per cent for the same illness condition. Similar increases in prevalence of depression or anxiety were recorded for men and women aged 35-54 years and those aged 55 years and over.

Illicit drug use

The HILDA survey included a new set of question on illegal drug use in 2017. The data shows around 12.0 per cent of the Australian population aged 15 years plus had used an illicit drug in the past 12 months with approximately 10.6 per cent using marijuana, 3.1 per cent using ecstasy, 2.9 per cent using cocaine, 1.5 per cent using hallucinogens and 1.2 per cent using meth/amphetamines. The rate of illicit drug use is much higher among younger age groups with almost a quarter of those in their 20s reporting they had used an illicit drug in the past year.

Usage rates decline significantly with age. Around 35 per cent of Australians aged 15 years plus reported they had used marijuana at least once in their lifetime compared with 11 per cent who reported they had used ecstasy, nine per cent who reported they had used cocaine and less than six per cent who had used meth/amphetamine at least once. While marijuana is the most common drug used around 64 per cent of marijuana users in the past year in 2017 did not use any other types of illicit drugs.

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[1] The sample for single parents with children under five years is very small (less than 200) which may have affected the results.

[2] In December 2017 prices.

[3] A Gini coefficient that is closer to one implies that the distribution of income is becoming less equal.

[4] As measured by household income being below 50 per cent of median equivalised household income.

[5] Welfare reliance is defined as having more than 50 per cent of annual household income sourced from welfare payments.