Men eclipse women in earnings, super

A report reveals couples, especially the over 65s, and men, are taking the lion’s share of wealth. By Heather Jacobs.

The gap between what women earn compared to men increased significantly in the 12 years to 2014. Heather Jacobs explains.

The average Australian man earns nearly a third more than the average woman and generally holds much higher savings in superannuation, indicating little is changing in terms of women’s financial equality.

The gap between what women and men earn has widened over the 12-year period to 2014, according to the recently released Household, Income and Labour Dynamics in Australia Survey managed by the Melbourne Institute of Applied Economic and Social Research.

In 2014 men were earning 31 per cent more than women. The average gross weekly earnings of males reached $1600 a week compared with $1200 a week for women, widening from a 26 per cent gap in 2002, according to the survey.

While a university degree improves earnings for both genders by about 30 per cent, university-qualified females still have a pay gap of 22 per cent with average weekly earnings of $1515 compared to $1943 for men.

Inequality also extends to retirement savings. In general, women have much lower super balances than men, a result of their lower lifetime earnings.

Closing this gap has become even more important as the majority of Australian adults are not expected to own their own home by 2017, meaning super will overtake the family home as the most important asset for Australian households.

The mean value (average balance) of superannuation across all households was $186,000 in 2014, compared to a value of $392,241 for the average home. The proportion of adults who are home owners dropped from 57 per cent in 2002 to less than 52 per cent in 2014 and is expected to drop below 50 per cent in 2017.


Wealthiest households

From 2002 to 2014, the median wealth of Australian households increased 37.1 per cent to $407,765, with much of that growth occurring before 2006. Between then and 2014, median wealth increased by only 1.4 per cent. (Median refers to the midpoint of household wealth in Australia, and is therefore less likely to be skewed by extremely large or small amounts, making it more representative of the typical household wealth for each age group.)

The wealthiest households in Australia are worth $734,386 and are occupied by couples aged over 65, who have experienced an increase in their median net wealth of 68.7 per cent since 2002. Young couples were the next wealthiest with a median net wealth of $614,102, up 24.6 per cent since 2002. They were followed by couples with dependent children, who saw a 27.1 per cent increase to reach $500,138. Single parents had the lowest median wealth levels, worth $99,246, up 33.2 per cent since 2002.

Broken down by age group, rather than relationship status, the contrast between the young and old is even starker. For example, median wealth grew by 61 per cent among people aged 65 and over, compared to 3.2 per cent among people aged 25 to 34.

Huge differences in super balances

To determine whether average super balances have changed much between 2002 and 2014, the HILDA survey compared the mean super balances of those aged 50 to 69 across three tiers of super holders – the bottom 50 per cent , the middle 40 per cent and the top 10 per cent.

It found the:

  • bottom half had a mean super balance of $1365 in 2002, compared to $13,719 in 2014
  • middle tier had a mean super balance of $120,110 in 2002, compared to $210,798 in 2014
  • the top 10 per cent had a mean super balance of $650,619 in 2002, compared to $991,268 in 2014.

In both 2002 and 2014, men dominated the top 10 per cent of superannuation holdings for people aged 50 to 69 and represented about 55 per cent of the middle group. (Most men and women in this age group are partnered, so this does not necessarily imply all women are less prepared for retirement than men.)

The Association of Superannuation Funds of Australia estimates it takes $545,000 for a single person or $645,000 for a couple to live a comfortable lifestyle in retirement. For those playing catch-up, this means making voluntary contributions. The association estimates only 7 per cent of Australian employees are making extra contributions to their super, the majority of these people are aged over 55.

While average super balances of both men and women grew between 2002 and 2014, increases were heavily concentrated among the over 60s. There was essentially no growth in mean superannuation balances among men and women aged under 35 in that time.

Home ownership drops for the young

The high cost of real estate is putting pressure on the younger generations, while older generations benefited from large increases in house values, according to Melbourne Institute professorial research fellow Roger Wilkins.

Home ownership among people aged 25 to 34 dropped from 38.7 per cent in 2002 to 29.2 per cent in 2014. For those who bought a home, debt levels escalated with the total value of household debt rising at a much faster rate than the value of household assets. From 2002 to 2010 the mean value of assets grew by 42 per cent while the mean value of debt grew 87 per cent. The survey found the total primary home-loan debt in Australia at $760 billion.

The HILDA Survey is funded by the federal Department of Social Services and managed by the Melbourne Institute of Applied Economic and Social Research at the University of Melbourne.