Economic mobility: Is everyone getting a fair go?

New research from the Productivity Commission has highlighted how well Australia is performing when it comes to income mobility.

A new report, Fairly equal? Economic mobility in Australia, has found that 67 per cent of the so-called “Xennial” generation – those born in 1976–1982, on the cusp of the Millennial/Gen X divide – earn more money than their parents did at a similar age.

“For most Australians, the amount your parents earned when you were young is not a life sentence,” said the chair of the Productivity Commission, Danielle Wood.

It is a different tune to what many Australians are experiencing right now. Young Aussies, especially, are juggling a cost-of-living crisis paired with rising housing prices. Although these results are positive, it seems that optimism among the younger generation of workers is somewhat dwindling.

“In Australia, a 10 percentile rise in a parent’s rank in the income distribution is linked to a relatively small 1.8 percentile rise in the child’s rank,” said commissioner Catherine de Fontenay.

“This result places us near the top of the global rankings for income mobility between generations, alongside the Scandinavian countries.”

Another aspect is that children with parents who reside in either the bottom or the top of the income scale are more likely to remain there themselves. Almost 15 per cent of people with parents in the bottom income decile, resided there themselves, while just 6 per cent of them rose towards the upper echelon of the income scale.

“On top of this, cost-of-living pressures and rising property prices mean higher earnings may not afford you the same standard of living and access to wealth as they have in the past,” Wood said.

“We shouldn’t take the ‘fair go’ for granted.”

It’s evident through the report that Australians living in poverty face some of the largest barriers when it comes to economic mobility.

“Most Australians have had a good opportunity to climb the income ladder, but it’s a much harder climb for Australians living in poverty,” de Fontenay said.

It’s no secret that the poverty rate in Australia has slowly increased over recent years. About one in seven Australians experienced poverty in 2022, and about 10 per cent of Australians experienced poverty in at least three of the five years between 2018 and 2022.

Furthermore, people who live in disadvantaged neighbourhoods, including those in remote locations, are more likely to remain in poverty over time and, thus, less likely to achieve economic mobility later in life.

“Australia really has been the ‘land of the fair go’ for many, but we can’t ignore what’s happening for people in poverty. Policymakers should make sure support is targeted to where people need it most,” Wood said.