Income and income inequality

A person’s wellbeing is influenced by many factors, but having an adequate income remains an essential component in measuring individual and household wellbeing. This page provides an overview of the economic wellbeing of Australians, including trends in individual income from wages, household income and income inequality, and financial stress. 

Of particular interest is examining trends in income inequality, which refers to the unequal distribution of income among households, where some earn considerably more than others (ABS 2022a). This disparity can lead to social and economic challenges, as those with lower incomes may face greater barriers to accessing essential resources and opportunities. Therefore, higher levels of inequality within a society can affect multiple dimensions of wellbeing and welfare across healthcare, education, housing and employment, while also being associated with higher rates of violence (Parliament of Australia 2014, Wilkinson 2020).

Income from wages

It is important to analyse income from wages as this is the primary source of income for about 3 in 5 adult Australians and contributes to the quality of life and potential financial stress that they experience (ABS 2022b; 2023). 

Income from wages can be measured using several data sources. On this page, we use full-time average weekly ordinary time earnings (AWOTE) to measure average weekly earnings for adults working full-time. Trends in AWOTE can be affected by changes in both wage rates and in the composition of employment. We also report on the Wage Price Index (WPI). Unlike measures of average weekly earnings, the WPI provides a measure of changes in hourly wage rates, which are not affected by compositional shifts in employment (see Income data sources).

Real wages growth recovered in 2024 due to growth in nominal wages and moderating inflation

The nominal AWOTE was $1,976 in November 2024, up from $1,396 in November 2012 (Figure 1).

Growth in nominal AWOTE has been strong in recent years, with an average annual growth rate of 4.2% between November 2021 and November 2024. Most recently, nominal AWOTE increased by 4.6% from $1,889 in November 2023 to $1,976 in November 2024. This is the highest growth recorded since 2013 except for a temporary spike of 4.8% during the onset of the COVID-19 pandemic in May 2020 (Figure 1). The strong wages growth since 2022 reflects increases to the national minimum wage in response to the rising cost of living. For example, the National Minimum Wage increased by 5.2% in 2022–23, by 8.6% in 2023–24 and by 3.7% in 2024–25 (Fair Work Commission 2024).

Accounting for inflation when reporting on trends in wages is important to determine if wage increases are actually improving workers’ ability to afford goods and services or just keeping up with rising costs. This is typically referred to as real wages. Inflation may cause individuals to be worse off if nominal wages growth does not keep pace with inflation and the associated growth in expenditures. Since mid-2021 inflation has been rising and peaked at 7.8% over the year to December 2022. It has since moderated to 2.4% over the year in both December 2024 and March 2025.

With moderating inflation and strong growth in nominal wages, real wages growth has recovered to 2.1% over the year to November 2024. This follows low growth of 0.4% over the year to November 2023 and 2 years of declines in the real value of wages between November 2020 and November 2022, reaching a peak decline of 4.1% over the year to November 2022. Despite recent growth in real wages, the real AWOTE in November 2024 ($1,976) was still just below the $1,990 recorded before the COVID-19 pandemic in November 2019 and only slightly higher than the $1,908 recorded in November 2012 (Figure 1).

Similarly, annual growth in the nominal WPI was 3.4% in March 2025, following several years of strong growth since 2022 (reaching a peak of 4.3% in December 2023 – the highest growth in the WPI since March 2009). After accounting for inflation, the annual growth in the real WPI recovered to 1.0% in March 2025 following weak annual growth of 0.4% in March 2024 and declines in the real WPI in each quarter between June 2021 and September 2023 (Figure 1).

Household income inequality

While the above-mentioned income data from wages for employed people provides important person-level information on income trends and changes in living standards, it is also important to look at household income and how this has changed at different points of the income distribution. Household income accounts for households sharing resources and expenses and it captures flexible or irregular work patterns (such as part-time, casual, temporary and over-time work). 

Strong growth in nominal household incomes since 2022, fastest growth in 15 years

Based on PolicyMod, the median nominal equivalised household disposable income (household income) was $1,464 per week in December 2024 (equivalised income adjusts for household size and composition). Between 2007 and 2021, household income increased, on average, by 3.2% each year. Since 2021, annual growth in household income increased to 7.4% between 2021 and 2022, 5.4% between 2022 and 2023 and 6.6% between 2023 and 2024. This is the fastest growth since 2007 (an average of 10.7% per year between 2005 and 2007; Figure 2).

However, there is a wide range of different household incomes with the top fifth of households having an average weekly income of $2,488 compared with $549 for the bottom fifth of households (Figure 2).

Real household income growing by 3.2% in 2024 and returning to similar levels as in 2021, following two years of declining incomes

While the high inflation between 2021 and 2023 meant that income growth did not keep pace with rising living costs, moderating inflation since 2023 has allowed household incomes to grow faster than prices, resulting in positive real income growth.

After adjusting household income for inflation using the ANU’s living cost index (see Income data sources), median real equivalised household disposable income (real household income) increased by 3.2% from $1,418 in 2023 to $1,464 in 2024 (Figure 2). This marks a turnaround following 2 consecutive years of declines in real household income during which real household income fell by an average of 1.3% per year between 2021 and 2023. By 2024, real household income recovered to similar levels as in 2021 ($1,455).

As shown in Figure 2, growth in real household income between 2021 and 2024 has been different for different types of households. For example, owners with a mortgage experienced a 7.7% decline in real income over the 3 years, from $1,847 in 2021 to $1,705 in 2024. In contrast, real incomes grew by 9.7% for owners without a mortgage and by 5.5% for renters over the same time period. These differences reflect the sharp rise in mortgage costs of 58% between 2021–2024 (AIHW analysis of ANU PolicyMod data). Notably, real household incomes for owners with a mortgage were at a peak in 2021, reflecting historically low interest rates in 2020–2021.

Between 2023 and 2024, households across all income quintiles experienced growth in real household income, following declines from 2021 to 2023 for households from all income quintiles except for the lowest income quintile (Figure 2). Overall, between 2021 and 2024, real household income for lower-income households grew by 3.1% from $532 to $549 (income quintile 1) and by 0.9% from $928 to $936 (income quintile 2). In contrast, by 2024, middle-income and higher-income households still experienced incomes below those in 2021, declining by 1.3% from $1,279 to $1,262 (income quintile 3), by 3.1% from $1,718 to $1,666 (income quintile 4) and by 1.8% from $2,534 to $2,488 (income quintile 5). The declines for middle-income and higher-income households over 2021–2024 may reflect a higher proportion of owners with a mortgage (RBA 2024) who were exposed to rising mortgage costs during this period (see housing costs increasing for owners with a mortgage).

Real household disposable income per capita returned to the same level as it was in 2020 after almost 3 years of declines 

Real household disposable income per capita derived from the Australian National Accounts (see Income data sources) followed similar patterns as the projected household income data from PolicyMod. It is only in March 2025 that it has returned to the same level as it was in March 2020 prior to the onset of the COVID-19 pandemic. This follows almost 3 years of declines by an average of 4.2% between September 2021 and June 2024, before beginning to rise again by up to 1.7% between March 2024 and March 2025 (ABS 2023e).  

Income inequality moderating after the peak in 2021-22

Income inequality can be measured by the Gini coefficient which varies between 0 and 1 with lower numbers representing less inequality. In 2022–23, the Gini coefficient was 0.304, decreasing from the two-decade high of 0.321 in 2021–22.

Over the past 2 decades the Gini coefficient varied between the lowest value of 0.287 in 2003–04 and the highest value of 0.321 in 2021–22. 

During the COVID-19 pandemic, the Gini coefficient decreased from 0.302 in 2018–19 to 0.290 in 2019–20 and 0.296 in 2020–21. This may reflect the COVID-19-related government economic support packages, such as the introduction of the Coronavirus Supplement for working-age income support recipients that was in place until March 2021. 

Financial stress

The cost of living pressures associated with rising inflation and interest rates since 2022 have led to increases in financial stress among many Australians (Biddle and Gray 2023a, 2023b; Biddle et al. 2024; O’Donnell et al. 2024). According to the ANUPoll, 35% of Australian adults found it difficult or very difficult to meet household expenses on their current income in April 2025. This is substantially higher than before the COVID-19 pandemic (27% in January 2020) and the lower levels experienced during the pandemic (within the range of 17% and 23% between April 2020 and October 2021). Since then, it has been gradually increasing to 24–25% in 2022, 28–31% in 2023 and 34% in 2024.

Financial stress increasing in 2023 with record high proportions of people missing meals

The prevalence of financial stress increased in 2023 to the highest rate in 11 years, reflecting financial pressures associated with the cost-of-living crisis. The proportion of people aged 15 and over experiencing at least one of the 7 financial stress factors (see Financial stress data sources) was 21% in 2023, increasing from 18% in 2021–2022 (Figure 3).

Some people may experience more severe financial stress than others, for example, falling behind on their bills, falling behind on their mortgage or rent payments, or not being able to afford meals. The prevalence of people experiencing one of these more severe financial stress factors has increased from 12–13% in 2019–2022 to 14% in 2023. The proportion of people missing out on meals, in particular, has risen to 4.9% in 2023 (highest on record since the inception of the HILDA Survey in 2001). This compares with an average of 3.3% in 2001–2019, including 3.9% in 2019 (Figure 3).

The increasing prevalence of any financial stress, severe financial stress and missing meals between 2019 and 2023 was also observed when controlling for demographic, geographic and socioeconomic factors in panel logistic regression models (adjusted odds ratios of 1.2, 1.3 and 1.4, respectively; Figure 4).

While 21% of people aged 15 and over experienced financial stress in 2023, for different groups of people their experience of financial stress varied. In 2023, groups with high level of financial stress included:

• 31% of people who had had a serious personal injury or illness in the past year
• 37% of renters
• 43% of single parents.

Financial stress for all these sub-groups have increased since 2020–2021 (Figure 3).

Renters, single parents and 35–49-year-olds are at highest risk of experiencing financial stress

Figure 4 presents the results from a logistic regression analysis modelling a person’s odds of experiencing financial stress in 2023, accounting for a range of individual characteristics (such as sex, age, household structure, housing tenure, socioeconomic disadvantage, education and remoteness).

There are associations between financial stress (any financial stress or severe financial stress) and most of the above-mentioned individual characteristics for people aged 20 years and over (Figure 4). These associations are the strongest for:

• single parents relative to couples without children (odds ratios 3.1 for any financial stress and 3.3 for severe financial stress) 
• renters relative to owners without a mortgage (odds ratios 3.1 for any financial stress and 3.5 for severe financial stress) 
• people living in the most disadvantaged areas relative to people living in the most advantaged areas (odds ratios 2.3 for any financial stress and 2.4 for severe financial stress). 

In addition, people aged 20–24 and people aged 50 and over were less likely to experience financial stress relative to people aged 35–49 (for example, odds ratios for people aged 65 and over are as low as 0.45 for any financial stress and 0.46 for severe financial stress). The reason for the 20–24 age group experiencing lower financial stress could be associated with being less likely to fall behind on paying their electricity, gas or telephone bills compared to those aged 35–49 (odds ratio 0.67), while they were more likely to ask friends or family for financial help (odds ratio 1.2). 

Where do I go for more information?

For more information on income and income inequality, see:

• AIHW Housing Data Dashboard
• AIHW Housing affordability
• Melbourne Institute: Applied Economic & Social Research HILDA Survey
• Australian Bureau of Statistics Measuring What Matters themes and indicators
• Australian Data Archive Data Access to the HILDA Survey