No quick escape from inequality

Since 2010, the average person in the richest 10% is nearly $10,000 better off. But the average person in the poorest 10%? Just $200 better off.

That’s the real story behind the headlines this week about child poverty falling. So don’t be fooled into thinking that anything has happened to close the yawning gap between the rich and the rest in New Zealand.

This year’s Household Incomes in New Zealand report shows that the income gap – and our levels of child poverty – remain stuck at twice the level they were at the 1980.

Even just in the last few years, since the global financial crisis, the report shows that people on the lowest incomes were hit hardest by the crisis, and haven’t recovered the ground they lost. Incomes for the bottom half of the country have been static or falling in the last few years, while those at the top have increased.

The story of the last few decades looks even worse. Think about how much someone in the richest 10% earned compared to someone in the poorest 10%, a ratio that has gone from about 4.5 times in the mid-1980s to 7.5 times in 2013. So the average rich person earns 7.5 times as much as the average poor person, whereas they used to earn 4.5 times as much. That’s a big shift.

This is part of the real story, which is one of a widening gap between rich and poor over the last 30 years. This was driven by a huge surge in the 1980s and 1990s, which was the biggest in the developed world, and which has left us far, far more unequal than we were 30 years ago.

We’re now a generation, at least, into this world of much larger gaps between rich and poor. And the cumulative effects of that widened gap are not only quite frightening, they show no signs of abating, given the continuing high levels of inequality we see in the Household Incomes report.

And that remains the real problem: whatever has been happening in the last few years, we are a long, long way from grappling with the very real problems created in the last few decades.


What should we do about it?


max-headMax Rashbrooke writes for newspapers and magazines in Britain and New Zealand, including the Guardian, the National Business Review and the Listener. He was the recipient of the 2011 Bruce Jesson Senior Journalism Award. He is the editor of Inequality: A New Zealand Crisis