Poverty in Australia

A friend of mine on Facebook posted up a quote:

“You need only do three things in this country to avoid poverty – finish high school,marry before having a child, and marry after the age of 20. Only 8 percent of the families who do this are poor; 79 percent of those who fail to do this are poor.”

William Galston, Clinton White House

He wondered whether the states would be the same in Australia; that question intrigued me to investigate the differences atwixt here and there.:

Current poverty rate in the United States is 15.1 percent. The measure is based on income received – $22,350 per annum for a family of four, or about $428 per week.

http://en.wikipedia.org/wiki/Poverty_in_the_United_States

Source: http://www.politifact.com/truth-o-meter/statements/2011/nov/09/newt-gingrich/gingrich-says-more-americans-are-poverty-today-any/

Poverty rate in Australia is also based on income received. However, here the poverty level is defined by the Henderson Poverty Index from the Melbourne Institute (based upon the Henderson inquiry of 1973). Using this basis, the Poverty Line in Australia is $776.71 per week for a non-working family of four, or about $40,528 (as of September 2011).

Source:
http://melbourneinstitute.com/downloads/publications/Poverty%20Lines/Poverty_lines_Australia_Sep2011.pdf

The current estimate is ‘1 in 10’ Australians, or 10%, live in poverty according to this definition.

Source: http://www.google.com.au/url?sa=t&rct=j&q=australia+poverty+line+2011&source=web&cd=6&ved=0CFUQFjAF&url=http%3A%2F%2Fwww.homelessnessaustralia.org.au%2FUserFiles%2FFile%2FFact%2520sheets%2FFact%2520Sheets%25202011-12%2FHomelessness%2520%26%2520Poverty%25202011-12%282%29.pdf&ei=JmI8T9iEOYrymAX75PXECw&usg=AFQjCNE6-BidGo40RScH_spCXdPaZVX4Gg&cad=rja

To put that lot in perspective, in the US you are considered to live in poverty if you live on $US428 per week for a family of four – poverty rate 15.1%. In $US, the equivalent Australian measure is $US823 – and our poverty rate according to that definition is 10%.

In Australia, the same non-working family of four is entitled to a welfare payments (again according to the Melbourne Institute as above) of $686.41 per week. I believe I am correct therefore in saying that Australia has a welfare system that prevents people from being in the situation that does not even begin to define poverty in the United States as welfare payments exceed US’s threshold. So in my brief sojourn into the world of social welfare research (rather than my actual research), there are three measures of poverty:

  • Objective – you earn less than this, you don’t have enough to survive on the staples with. For this kind of poverty, dumpster-diving is a way of life.
  • Relative – you earn less than a majority of people in your country, so you live in relative poverty (x-boxes aside). For this kind of poverty, surround yourself with friends who are less well off than you.
  • Subjective – you feel like you don’t earn enough to live off. This is everyone, because everyone defines someone else as rich if they earn about 10% more than you do.

When I look at the toys my kids get compared to what I got growing up, and then they announce ‘I’m bored’ – well, I could just throttle them :). I can tell you, I didn’t break my Christmas presents on Christmas day – heck, I still have my Christmas present radio from 1986 (it’s looking a bit battered and I’ve finally retired it).

In the States, too, the point was made that the wage arrangements allow wait staff at cafes etc to be paid $3 and make up the difference to the minimum wage via tips.  Apparently if the waitstaff don’t get sufficient tips to make the minimum wage the employer is supposed to cover it.  Apparently, a lot of people don’t know that rule (thanks Sam!).  And Sam also pointed out that there are a lot of ‘private/public benefits’ of the welfare state – she has had to buy a more expensive house in a ‘good’ area, and security firms are a way of life in some parts of the US, due at least in part, probably mostly, to the grinding level of poverty and the complete lack of a welfare safety net.

To be clear: I think it’s a good thing to have safety net. I also think its a good thing to have a high-ish minimum wage. You hear of unskilled people in US working huge hours and getting paid next to nix. I’d rather they had training options available to build a future for them and their family. Sam also pointed out the difference between purchasing power in Australia and the US; that’s very true, especially given housing costs here versus there.  Nonetheless I think the overall conclusion remains – Australia is much more insulated from ‘real’ poverty and thus the Occupy movement here in Australia is not quite full of the 99%ers.

So, just wow. Two countries alike in many ways and yet so very very different.

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