65 Percent of Australian ‘Xennials’ Earn More than Their Parents

People flock to Pitt Street Mall in Sydney, Australia, on Dec. 26, 2022. (Roni Bintang/Getty Images)

Australians aged 42–48 are more likely to have a higher income than their parents compared with other generations, new data has shown.

The Productivity Commission has released a new report (pdf) illustrating the changes in Australians’ income over their life course and in relation to their parents’ income in recent years.

The report found that 67 percent of “Xennials,” those born in 1976–82, earned more than their parents did at a similar age.

While each generation, on average, earned higher individual incomes than the previous generation at a given age, slow growth in recent periods caused people born in the 1990s to experience almost no growth in incomes between the ages of 25–30 compared to those born in the 1980s.

“Weak income growth for people born in the 1990s reflects the poor economic outcomes experienced by younger people following the global financial crisis,” the report said.

In addition, the lower the parent’s income, the more likely children earned higher incomes than their parents.

“About 96 percent of children with parents in the bottom income decile earned more than their parents did around the same age, but only 21 percent of children with parents in the top income decile earn more,” the report said.

Men also had a higher chance of earning more than their parents compared to women.

Among Xennials, over half (56 percent) of women earned more than their parents compared to over three-quarters of men (77 percent).

Men with middle-to-high-income parents were more than twice as likely to earn more than their parents compared to women.

While there was a tendency for income to grow for each subsequent generation, it was not necessarily the case for wealth.

The report found that people experienced far fewer changes in their wealth over their lifetime, with over 40 percent of people in the top or bottom two income deciles in 2001 remaining there in 2022.

“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,” said Productivity Commission Chair Danielle Wood.

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

Highly Ranked In Income Mobility

At the same time, the Commission found that there was a weak relationship between the incomes of parents and their children.

This means children have more equal chances to earn a reasonable income regardless of whether their parents are rich or poor.

“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.”

Pedestrians move past a woman sitting on the George Street sidewalk in Sydney, Australia, on Oct. 18, 2022. (Lisa Maree Williams/Getty Images)

Meanwhile, among the people with parents in the bottom income decile, around 15 percent remained at their parents’ levels, while only 6 percent ended up in the top income decile.

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

Rise in Poverty

At the same time, the report found that poverty was rising slowly in Australia following the COVID-19 pandemic.

Australia’s poverty line is at an income of around $489 per week for a single adult and $1,027 per week for a couple with two children. This is based on the OECD’s definition of the poverty line being 50 percent of the median household income after tax.

Around one in seven Australians experienced poverty in 2022, the highest level recorded since 2001.

Further, 10 percent of Australians suffered poverty in at least three of the five years between 2018 and 2022.

People from migrant backgrounds who did not speak English, single parents, and those living in disadvantaged neighbourhoods were most likely at risk of poverty.

“Australia really has been the ‘land of the fair go’ for many, but we can’t ignore what’s happening for people in poverty,” Ms. Wood said.

“Policymakers should make sure support is targeted to where people need it most.”