In response to calls to increase the jobseeker’s pay, the Albanian government is expected to announce an increase in Tuesday’s budget only for recipients aged 55 and over.
This will fuel the well-known generational debate about the relative levels of hardship experienced by older and younger Australians.
JobSeeker’s current single rate is $49.51 per day, about 65% of the retirement pension and 18.5% of the average full-time wage. Last month, the government’s own Advisory Committee on Economic Inclusion recommended increasing it to 90% of the old-age pension.
This age targeting is reportedly justified on the grounds that older recipients are more likely to be long-term unemployed and predominantly female.
But are younger recipients less needy? Our research suggests that their need may be greater and report much more hardship than older Australians, even if they rely on JobSeeker.
Read more: Boosting JobSeeker is the most effective way to tackle poverty: what the treasurer’s committee told him
Measuring financial problems
Our results come from Australia’s Household, Income and Labor Dynamics survey, better known as the HILDA survey – which has surveyed a representative sample of approximately 18,000 Australians about many aspects of their lives every year since 2001.
Our first chart shows the average financial problems by age.
We have compiled this index from HILDA participants’ responses to seven indicators of their material deprivation over the past nine months. These were, due to lack of money:
- could not pay the electricity, gas or telephone bills on time
- could not pay the mortgage or rent on time
- pledged or sold something
- went without meals
- could not heat the house
- asked for financial help from friends or family
- assistance from welfare or social organizations.
About 22% of those aged 20-80 reported at least one deprivation, with the average deprivation of those in their twenties being 2.9 times that of those aged 55 to 69.
The following chart shows the constituent elements of the composite measurement.
While the responses to “asking for help” – where young people presumably ask parents first – seem to skew the results, five of the other six measures follow the same pattern. (The exception is “can’t heat house,” where there is no significant age trend.)
One reason for this clear pattern is home ownership and wealth accumulation after a while. Young people generally have more financial stress because they have had less time to build up liquid assets, such as cash and bank deposits.
However, it is also possible that younger people are more likely to admit hardship our research suggests this is not an important factor.
What about JobSeeker recipients?
The following chart shows the financial stress among Job Seeker recipients by age before and during 2020. It also shows the effect of higher payments in 2020, when the federal government doubled the number of Job Seekers for six months (known as the Coronavirus Supplement) .
Thanks to those payments, financial stress among young people fell to the lowest level in at least two decades. But that still meant those under age 55 were, on average, 2.5 times more likely to report being financially stressed than those age 55 and older.
The 2020 Coronavirus Supplement Experiment has taught us that a higher payout rate for jobseekers can make a real difference to the financial well-being of all Australians, young and old.
We will soon hear what the federal government has learned from this policy lesson.
Read more: Presented with a JobSeeker finding that was too obvious to ignore, he changed the subject: how Jim Chalmers shapes the budget
