The lowest paid Aussies could soon have a bit more cash in their wallets, as the federal government is looking to boost the minimum wage to fight the ongoing cost-of-living crisis.
The announcement would be welcome news to those struggling with rising costs, as more than 180,000 people currently earn the national minimum wage, and 2.7 million are being paid minimum award rates (the minimum legal wage in a particular industry).
Inflation has been sitting at 4.1 per cent in the year to December 2023, and although it’s not yet clear exactly how much minimum wage will rise, if it was raised at the same rate as inflation it would come in at $24.18. Just don’t spend it all at once.
Minimum wage currently sit as $23.23 per hour, after an increase of 5.75 per cent in July 2023.
The proposal will be sent to the Fair Work Commission on Thursday, which assesses each year whether to make an increase. The government has also said that any minimum wage increases would not affect the tax cuts coming later this year.
The draft submission, released on Monday, claimed low-paid workers are disproportionately affected by inflation and that minimum wage is an important tool to counter this.
“Despite increases in nominal wages and the return of annual real wages growth, the real value of award wages has been eroded in recent years given the global inflationary environment,” the draft submission reads.
“This submission does not suggest that across the board, wages should automatically increase with inflation, nor that inflation should be the only consideration in determining wages.
“Low-paid workers and their families are particularly affected by cost-of-living pressures because they typically do not have savings to draw on to cover rising costs.”
Combined with tax cuts, minimum wage workers could be looking at a cool $50 extra in their pockets each week if it does end up being raised to $24.18. Just don’t let the landlords know about it.
What does minimum wage buy you in Australia?
So what can you buy for $24.18 in Australia?
For one hour’s work you should just about be able to buy a meal at an inexpensive restaurant, averaging about $25 according to consumer price guide Numbeo.
If you’d rather eat at home, 500g of mince is currently about $14, leaving you just enough for some veggies on the side. One hour of work could also get you 5.3kg of apples, five loafs of bread or 15 litres of milk. Just not all at once, of course.
The average rent in Australian is $582, meaning you’ll have to work for just over 24 hours to keep a roof over your head. That’s more than half the working week, meaning that despite a raise many people will remain in financial stress (caused by more than 30% of a pay check going on housing).
If you wanted a cheap car, the average first car is about $7,000, or about 289 hours. Just don’t forget to fill it up, with an average refill costing $73.10, or about three hours work.
The average first house in Australia is about $550,000, meaning you’ll have to work for 22,746 hours to pay for it, or 4,549 hours to get that 20% deposit. That’s assuming you spend no money on avocado toast, of course.
If you wanted to compare yourself to the richest Australians, Gina Rinehart, Andrew Forrest and Harry Triguboff all make about $1.5 million an hour. To match, you’ll have to work for 62,034 hours, or just over seven years.
But hey, I’m sure they just work harder…
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