Australian Institute of Health and Welfare (2021) Income: household and individual., AIHW, Australian Government, accessed 08 December 2021
Australian Institute of Health and Welfare. (2021). Income: household and individual. Retrieved from https://www.aihw.gov.au/reports/children-youth/income-household-and-individual
Income: household and individual. Australian Institute of Health and Welfare, 25 June 2021, https://www.aihw.gov.au/reports/children-youth/income-household-and-individual
Australian Institute of Health and Welfare. Income: household and individual [Internet]. Canberra: Australian Institute of Health and Welfare, 2021 [cited 2021 Dec. 8]. Available from: https://www.aihw.gov.au/reports/children-youth/income-household-and-individual
Australian Institute of Health and Welfare (AIHW) 2021, Income: household and individual, viewed 8 December 2021, https://www.aihw.gov.au/reports/children-youth/income-household-and-individual
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A person’s economic wellbeing can be determined by multiple factors, including income, consumption and wealth. Combined, these factors illustrate a person’s access to resources, and the circumstances or living standards achieved with these resources (ABS 2015).
For most people, adequate income is the single most important determinant of their economic wellbeing as it supports access to food, clothing, education, housing or leisure activities (ABS 2015). However, income-based measures may not fully capture a household’s access to other resources, and taking account of household wealth as well as income can provide a more accurate picture of a household’s command over financial resources (McLachlan et al. 2013).
This section presents part of the picture by focusing on household income as a key determinant of a person’s economic situation. However, household income alone may not fully capture the differences in economic wellbeing among young people, as:
Findings are also presented on individual income among young people, in particular changes over time relative to other age groups. This may capture time spent in education, which could also affect future earnings.
Some information on parental transfers is presented, but data gaps remain. More data on income and consumption may be required to better understand the individual circumstances of each young person, including data on:
For more information about other factors of economic wellbeing that relate to consumption or the risk of experiencing financial difficulties, see Material deprivation and financial stress.
Data on household income are taken from the ABS Survey of Income and Housing (SIH). The survey collects data on a range of household and personal characteristics, such as income levels, income sources, employment status and family composition. These data help to provide a better understanding of the living standards and economic wellbeing of Australians (ABS 2019a).
Data from the SIH can be used to identify and compare households with at least 1 person aged 15–24. Data are collected from residents in private dwellings in Australia (excluding Very remote areas) every 2 years, and the latest data are available for 2017–18.
Where available, data from the SIH are reported separately for young people who live with their parents (as either dependent students or non-dependent children), and those who do not (that is, those living as couples, lone persons, or with child/ren under 15, other relatives, other non-family members). This distinction reflects that young people live in many different households and circumstances, which can influence their overall economic wellbeing. For example, young people living with their parents may benefit from access to shared family resources.
For more information about the living circumstances of young people across Australia, see Demographics of Australian young people and their families.
According to the ABS SIH, 15% (464,000) of young people aged 15–24 lived in low-income households in 2017–18 (Box 2). These low-income households, where at least 1 person was aged 15–24, accounted for 14% (282,000) of all low-income households in Australia. In comparison, households with young people made up 20% of high-income households (those in the highest quintile).
Low-income households with young people had an average weekly equivalised disposable household income (EDHI) of $416 while high-income households with young people had an average weekly EDHI of $2,094 (Box 2).
A household’s access to resources or income can be measured by its average weekly equivalised disposable household income. This measure of income is adjusted (or ‘equivalised’) according to household size and composition. Equivalising income accounts for a larger household needing more resources to achieve the same standard of living as a smaller household. It also allows for comparisons across different household types.
Low-income households are defined as those in the lowest 2 deciles of equivalised household income (EDHI), excluding the first and second percentiles (excluded due to the high wealth and expenditure patterns of some of the households in this category, and the prevalence of income types other than employee income and government pensions and allowances) (ABS 2019c).
High-income households are those in the highest 2 deciles of EDHI.
For information about sources of income, see Engagement in education or employment and Income support for young people.
Between 2007–08 and 2017–18:
Young people aged 15–19 were more likely to be living in low-income households than those aged 20–24 (17% compared with 13%). Young people living in low‑income households were more likely to be living with:
In 2017–18, for all households with young people aged 15–24, the average weekly EDHI was higher among those who lived with their parents ($1,088) than among those not living with parents ($983).
Measures of economic wellbeing using equivalised household income assume that resources are shared between household members. For specific population groups such as young people, measures of individual income can be used to shed light on a person’s circumstances even if they do not take into account the pooling of resources that occurs in a household.
This section examines income growth over time to show how young people are faring long term, particularly in relation to other age groups. The focus is on income growth among young people between 2008 and 2018. Data over this period can show how the slowdown of the economy after global financial crisis and the slowing of the mining boom affected young people who entered the labour market at this time (Productivity Commission 2020) (Box 3).
Data from the Household, Income and Labour Dynamics in Australia (HILDA) survey are available to report on income among young people. The HILDA contains detailed information on people’s income sources and related characteristics, such as education and health. HILDA data, though not comparable with ABS SIH data, are used here as the ABS SIH data are not collected as often, and their construction of income variables is not as consistent over time.
How is individual income measured?
Income is reported as income per person, calculated as the sum of income for an age group divided by the number of people in the age group. Changes in this average measure are an indicator of changes in income for the group as a whole and provide an appropriate summary of changes in all income sources.
Disposable income is derived by deducting estimates of personal income tax from gross income.
Income growth is compound annual growth, estimated as the average growth per year over a defined period (Productivity Commission 2020).
Broadly, individual income can be categorised into 3 types: labour income, government transfer income, and other income. For more information about government transfers or payments, see Income support for young people. For more information on engagement in employment see Engagement in education or employment.
Between 2008 and 2018 disposable income per person declined by 1.6% per year among young people aged 15–24. In comparison, the average income grew by 1.4% per year for people aged 35–64, and 3.2% for people aged 65 and over (Productivity Commission 2020).
This decline in income was predominantly driven by a decline in hours worked among those not currently studying. Income decline among young people is a cause for concern as it may result in lower savings and lower wealth. A lack of income growth among young people can also affect their future wellbeing by increasing their exposure to economic shocks.
Between 2008 and 2018, income growth was negative for people aged 15–24 across all demographic groups. However, there were some variations. Average annual decline in real disposable income was higher among:
For more information about living circumstances among young people, see Demographics of Australian young people and their families.
In 2018, labour income (86% of gross income) was the biggest source of income among young people, followed by transfer income (8.5%) and other income (5.4%) (Productivity Commission 2020).
Labour income includes wages and other employment-related income. As young people rely more on labour income than other age groups, its decline (due to reduced hours worked and reduced wage rates) was the main contributor to the decline in income among young people between 2008 and 2018.
Between 2008 and 2018:
For information about employment and underemployment, see Engagement in education or employment.
As well as labour income, young people also receive income from government transfers (or payments). In 2018, government transfers accounted for 8.5% of income for young people aged 15–24. Between 2008 and 2018, the proportion of young people aged:
These government transfers include income support payments, family payments, other payments, supplements, bonuses and in-kind benefits. Changes in reliance on this form of income may be due to changes in eligibility for certain payments. For more information about specific government transfers received by young people, see Income support for young people.
‘Other’ sources of income account for only a small proportion of young people’s income—5.4% in 2018. Other income includes income that is not labour income or government income, such as business income, investment income and parental cash transfers. Between 2008 and 2018:
Young people are also living at home longer and delaying their transition to independent living. While transfers from resident parents were generally small, the main benefit for young people who live with their parents is the savings they make on living expenses, such as on accommodation, groceries and household expenses (Productivity Commission 2020).
The impact of negative income growth since 2008 is likely to be compounded by the COVID-19 pandemic. Income allows young people to accumulate savings, which can be used to generate investment income or protect against economic shocks.
Negative income growth between 2008 and 2018 (largely due to reduced economy-wide labour demand) has meant that young people could not build their savings at the same rate as did previous generations. People aged under 35 may thus enter the COVID-19 recession with less protective savings and may face a much more difficult job market (Productivity Commission 2020).
Young people who enter the labour market during a recession may also have lower earning capacity and lower earnings long term (Andrews et al. 2020). Evidence suggests that earnings of graduates who enter the labour market during a recession are lower than those of other cohorts (Altonji et al. 2016).
Weak labour market conditions may also lead to lower skills–job matching, and young people who enter the market may face difficulties in climbing the occupation ladder (Andrews et al. 2020; de Fontenay et al. 2020). However, changes in participation in education among young people, can also have an impact on future earning potential.
For more information about participation in education, see Non-school qualifications.
For more general information on the economic impact of COVID-19, see COVID-19 and the impact on young people.
For information on:
Indigenous young people and income, see Section 2.08, Income in Aboriginal and Torres Strait Islander Health Performance Framework (HPF) report 2020 and Section 3.3, Income in Aboriginal and Torres Strait Islander adolescent and youth health 2018.
For information on how factors relating to income, finance and employment can affect children aged 0–14, see:
Income, finance and employment in Australia’s children.
For general technical notes relating to this report, see also Methods.
ABS (Australian Bureau of Statistics) 2015. Frameworks for Australian Social Statistics, Jun 2015. ABS cat. no. 4160.0.55.001. Canberra: ABS.
ABS 2019a. Household income and wealth: summary of results, 2017–18. ABS cat. no. 6523.0. Canberra: ABS.
ABS 2019b. Survey of income and housing, 2017–18. Customised report. Canberra: ABS.
ABS 2019c. Survey of income and housing, user guide, Australia, 2017–18. Canberra: ABS.
Altonji J, Kahn L & Speer J 2016. Cashier or consultant? Entry labor market conditions, field of study, and career success. Journal of Labor Economics S1(34):S361–S401.
Andrews D, Deutscher N, Hambur J & Hansell D 2020. The career effects of labour market conditions at entry. Treasury working paper 2020–01. Canberra: Treasury.
de Fontenay C, Lampe B, Nugent J & Jomini P 2020. Climbing the jobs ladder slower: young people in a weak labour market. Working paper. Canberra: Productivity Commission.
McLachlan R, Gilfillan G & Gordon J 2013. Deep and persistent disadvantage in Australia. Productivity Commission staff working paper. Canberra: Productivity Commission.
Productivity Commission 2020. Why did young people’s incomes decline? Commission research paper. Canberra: Productivity Commission.
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