How Long Until Wages Catch Up To The Housebuying Power Of 1992?

The long-term strategy for building economic wealth appears to be holding house prices steady while waiting for wages to catch up. This article does the maths to answer one question: how long until the average wage has the same housebuying power of the average wage in 1992?

In 1992, the average New Zealand house price was $105,000. The average wage at that time was almost $15 per hour. This means that most Kiwis found themselves able to buy a house after 7,000 hours of labour.

By 2021, the average New Zealand house price has climbed to some $750,000, while the average wage languishes at around $34 an hour. This means that most Kiwis today are looking at putting in 22,000 hours of labour before they can get to the position of homeownership.

Economists predict that the average New Zealand house price will increase by double-digit percentages in 2021. 5% increases are expected for the two years after that, up until March 2024, which is as far ahead as anyone responsible will try to predict.

Let’s make two assumptions: firstly, that these forecasts are broadly correct; secondly, that house prices stop increasing after March 2024, allowing wages to catch up.

This suggests that house prices will top out at a national average of about $910,000 ($750,000 x 1.10 x 1.05 x 1.05). This assumes that they increase by around 10% in the year to March 2022, and then 5% for the two years after that, before remaining stable thereafter. The reality is, of course, anyone’s guess, but let’s say for simplicity’s sake that house prices reach $910,000 by March 2024 and then stay there in perpetuity.

To buy a $910,000 house with 7,000 hours of labour, a worker would have to be getting paid $130 per hour. Assuming that all other things (labour share, taxes, rents, non-rent living costs) are equal, $130/hr is what the average wage would have to be for the average worker to have the same housebuying power as the average worker in 1992.

As mentioned above, the average wage in New Zealand is around $34 right now. This means that it has to increase 3.82 times for the average worker to have the same housebuying power that the average worker had in 1992 – without house prices increasing beyond March 2024.

Wage growth over the past 28 years in New Zealand, from just under $15 an hour in 1992 to around $34 an hour at the end of 2020, has run at about 3% per annum.

If we assume future wage increases of 3% per annum, and no further house price increases beyond March 2024, then we will have to wait around 48 years for the average wage to catch up to the housebuying power that the average wage had in 1992.

In reality, it’s unlikely that house prices will remain exactly the same for the next 48 years. When the Boomers start dying off en masse, beginning in about 15 years, the demand for housing will rapidly fall all across the Western World. At that point, house prices could go in any direction depending on how much immigration takes place.

Of course, if house prices continue to increase beyond March 2024, then wages will simply never catch up. The West will become more and more verticalised until we effectively regress into a feudal-style economy where 99% of people are renters for life.

What can be said with confidence, however, is that it will take around half a century, at current rates, for wages to catch up to the point where the average worker has the same housebuying power they had in 1992. And that is even if one assumes that house prices don’t continue to increase.

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Understanding New Zealand 3: Voting Sustainable NZ in 2020

Vernon Tava’s Sustainable NZ party made a transparent attempt to target the center of the political spectrum. The logic was that they would be an environmentalist movement that wasn’t tarnished by the social justice obsession of the Greens. In the end, they received 1,880 votes, which amounted to less than 0.1% of the total.

VariableVoting Sustainable NZ in 2020
Voting ACT in 20200.54
Voting National in 20200.50
Voting Greens in 20200.26
Voting New Conservative in 20200.37
Voting The Opportunities Party in 20200.32
Voting Labour in 20200.02
Voting Aotearoa Legalise Cannabis Party in 2020-0.41
Voting Maori Party in 2020-0.46

Sustainable NZ may not have won many votes, but they succeeded in positioning themselves somewhere between the National Party and the Green Party. The correlation between voting Sustainable NZ in 2020 and voting National in 2020 was 0.50, and with voting Greens in 2020 it was 0.26. Both are significantly positive.

The correlation between voting Sustainable NZ in 2020 and voting Labour in 2020 was not significant, at 0.02. This suggests that Sustainable NZ was successful in avoiding the label of ‘left-wing’. In fact, there was even a correlation of 0.37 between voting Sustainable NZ in 2020 and voting New Conservative in 2020.

The strongest negative correlations with voting Sustainable NZ in 2020 were with voting for the parties representing disadvantaged demographics, such as the ALCP (-0.41) and the Maori Party (-0.46).

VariableVoting Sustainable NZ in 2020
< $5,000-0.17
$5,000-$10,000-0.11
$10,000-$20,000-0.37
$20,000-$30,000-0.18
$30,000-$50,000-0.32
$50,000-$70,0000.23
$70,000+0.44

The general rule is: the wealthier the voter, the more likely they were to vote Sustainable NZ in 2020. The reason for this, as it is for the Greens and The Opportunities Party, is that environmental issues are high up Maslow’s Hierarchy of Needs, and people suffering from housing or income insecurity will vote on the basis of that instead.

The strongest support of any income bracket for Sustainable NZ came from the $70,000+ bracket. The correlation between voting for Sustainable NZ in 2020 and having a personal income of over $70,000 was 0.44. This is a curious result, given that votes for alternative parties are normally cast by disenfranchised people, and disenfranchised people normally vote for left-wing parties. This paradox may explain why Sustainable NZ got so few votes.

The financially disenfranchised avoided voting for Sustainable NZ. The correlation between having an income between $10,000 and $20,000 and voting Sustainable NZ in 2020 was -0.37.

VariableVoting Sustainable NZ in 2020
No qualifications-0.46
Level 1 certificate-0.22
Level 2 certificate-0.31
Level 3 certificate-0.24
Level 4 certifiate-0.30
Level 5 diploma-0.20
Level 6 diploma0.55
Bachelor’s degree0.36
Honours degree0.40
Master’s degree0.34
Doctorate0.34

As with the Greens, ACT and The Opportunities Party, highly educated voters were more likely to vote Sustainable NZ than poorly educated ones. There was a significant positive correlation between voting Sustainable NZ in 2020 and having any of the university degrees. On the other hand, there was a correlation of -0.46 between voting Sustainable NZ in 2020 and having no academic qualifications.

Unlike the Greens, the correlation between voting Sustainable NZ in 2020 and having a highest educational qualification of a level 3 certificate was significantly negative. This reflects the fact that the Greens have broad appeal among university students, a niche that Sustainable NZ were unable to gain entry to.

From these three sets of correlations, we can see that Sustainable NZ voters were considerably more privileged than the average voter.

VariableVoting Sustainable NZ in 2020
No children0.19
One child-0.02
Two children0.39
Three children-0.05
Four children-0.46
Five children-0.62
Six children-0.64

Sustainable NZ voters walked the talk when it comes to the sustainability of their breeding. The strongest correlation between voting for Sustainable NZ in 2020 and having any number of children was two (0.39). There was also a positive correlation of 0.19 between voting for Sustainable NZ in 2020 and having no children.

On the other hand, there were significant negative correlations between voting Sustainable NZ in 2020 and having four, five or six children. All three of these correlations were at least as negative as -0.46. Sustainable NZ voters are clearly aware that having more than two children is unsustainable.

VariableVoting Sustainable NZ in 2020
Working as a manager0.45
Working as a professional0.31
Working as a machinery operator or driver-0.52
Working as a labourer-0.45

A curious outcome of the election is that there was a significant positive correlation between voting Sustainable NZ in 2020 and both working as a manager and working as a professional. Working as a manager and working as a professional are the archetypal occupations of National and the Greens, respectively.

The working-class occupations, by contrast, were relatively less likely to vote Sustainable NZ in 2020. As mentioned above, people who are worried about housing affordability generally consider environmentalism to be a luxury concern.

In summary, Vernon Tava and his Sustainable NZ movement were successful in positioning themselves in the “blue-green” space that appeals to educated, long-sighted people, whether managers or professionals. The problem is that they failed in the much more important objective of obtaining enough votes to threaten the 5% threshold.

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This article is an excerpt from the upcoming 3rd Edition of Understanding New Zealand, by Dan McGlashan and published by VJM Publishing. Understanding New Zealand is the comprehensive guide to the demographics and voting patterns of the New Zealand people.

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If you enjoyed reading this essay/article, you can get a compilation of the Best VJMP Essays and Articles of 2019 from Amazon for Kindle or Amazon for CreateSpace (for international readers), or TradeMe (for Kiwis). A compilation of the Best VJMP Essays and Articles of 2018 and the Best VJMP Essays and Articles of 2017 are also available.

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Starving The Three Lions

People today work as hard as their parents did, but they have much less wealth. The reason for their relative poverty is that three mighty lions take a share of every worker’s production before it gets to their bank account. These three lions have always existed, but today they are much more ravenous than ever before.

The first lion is profits.

Ultimately, it doesn’t matter how productive the average worker is, because their employer takes all their production off them and gives only a fraction back, in the form of wages. This is inescapable given that the employer owns the workplace and everything that gets produced in it, and given that the Police will always take their side (at least initially) in any property or rights dispute.

In America, the labour share (or wage share) has been declining for several decades. Compared to the early 1970s, the labour share has declined some 10%. An OECD report suggests that a similar decline, of about 10%, has been seen in the labour share across a basket of Western countries. Employers take more, and give back less, than ever before.

To put this into perspective, the average American worker produces some USD72 of goods and services per hour of labour. A fall in labour share, from 65% to 55%, represents a $7.20 difference by the time it gets to the worker – and that’s before the other two lions take their share!

The second lion is taxes.

The average tax burden in Anglo countries is about 30%. This is lower than the average of other Western nations, and reflects that Anglo countries are run in accordance with a small-government ideology. However, it’s still a significant amount of the average worker’s productivity. After losing 45% of their productivity to profits, to lose a further 30% to taxes is brutal.

It means that our average worker, having produced $72 of goods and services before the lions took their share, is now down to about $27 after profits and taxes have been accounted for. The tax burdens of Taiwan, Hong Kong and Singapore, by contrast, are all less than 15%, despite that their wages and standards of living are similar to those of Anglo countries.

And there’s still the third lion to contend with – perhaps the hungriest of all. This third lion is rents.

The median monthly gross residential rent in the United States is now around $1,100 per month. Median rents in New Zealand are around the same level. Assuming that our average worker works 150 hours a month, dividing their rent by the number of hours worked gives us around $7 an hour. In other words, seven dollars of the income earned for every hour of labour the average worker performs goes to pay the rent.

Subtracting this from the $27 after profits and taxes means that the average American worker ends up with $20 out of every $72 they produce, once profits, taxes and rents have been taken out. If the labour share was still 65%, if the tax rate was 15% like in Far East Asia and if the average rents were at pre-Clown World levels (let’s say $600 per month), the average worker would be left with around $36 for every hour worked – almost twice as much as in reality.

Moreover, out of the $20 per hour the average worker gets in reality, they have to pay for a number of work-related expenses out of that. Transport to and from their job, work clothing, health insurance (if American) and the cost of any psychiatric medicine they might need would account for another $10 at least. They also need to save some of their wage for a house deposit if they aspire to ever be more than a rentcuck.

All of these facts tell us that, if the average Anglo worker in 2021 had the benefit of a pre-1970s labour share, Far East Asian tax levels and pre-Global Financial Crisis rent levels, they would have about three times as much disposable income as they actually do have in reality. Once the three lions have taken their share, there isn’t much left over for the average worker.

In summary, the three lions that take a share out of every worker’s wage, before the worker sees it, are profits, taxes and rents. If we could reduce these expenses to levels that exist elsewhere in space and time, we could triple the prosperity of the average worker.

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Understanding New Zealand 3: Who Voted Greens in 2020

Like the ACT Party, the Greens have been described as the next generation’s alternative to the Establishment. Also like the ACT Party, the Greens increased their vote from 2017, although the Greens only increased slightly, from 162,443 votes (6.3% of the total) to 226,757 votes (7.9% of the total). This was enough for ten seats in Parliament.

As in previous years, those who voted Greens in 2020 were much better educated than the average New Zealander. This, more than anything else, was the most distinguishing characteristic of the Greens voter.

VariableVoting Greens in 2020
No qualifications-0.64
Level 1 certificate-0.58
Level 2 certificate-0.53
Level 3 certificate0.31
Level 4 certificate-0.60
Level 5 diploma-0.71
Level 6 diploma0.05
Bachelor’s degree0.59
Honours degree0.77
Masters degree0.74
Doctorate0.77

The correlation between having any one of the three highest university degrees and voting Greens in 2020 was at least 0.74. This is one of the strongest correlations between any demographic variable and voting for a particular party in 2020.

On the other hand, the correlation between having no qualifications and voting Greens in 2020 was -0.64.

The Greens are a large enough movement to present different faces to different people. Although some might see Marama Davidson and Golriz Ghahraman, and decide that the Greens are a dangerous pack of Brown Communists, others see Chloe Swarbrick and James Shaw and decide that the Greens are the only party who take science and scientific evidence seriously.

VariableVoting Greens in 2020
Casting a special vote for Yes in the euthanasia referendum0.70
Casting a special vote for Yes in the cannabis referendum0.68

This latter point is shown most clearly in the results of the cannabis referendum. There was a very strong positive correlation of 0.68 between casting a special vote for Yes in the cannabis referendum and voting Greens in 2020.

The correlation was even more strongly positive for the euthanasia referendum, which speaks to the absence of religious superstition among Green Party voters. The most common reason for people to vote No in the euthanasia referendum was a superstitious fear of death, and not many Green voters suffer from this.

VariableVoting Greens in 2020
No religion0.31
Buddhism0.22
Christianity-0.39
Hinduism0.09
Islam0.10
Judaism0.54
Maori religions-0.30
Spiritualism and New Age religions0.34

It’s easily possible to overstate how irreligious the Greens are. Although there was a significant negative correlation between voting Greens in 2020 and being either Christian (-0.39) or a follower of a Maori religion (-0.30), these were the only religions to be so negatively correlated.

The strongest positive correlation between voting Green in 2020 and belonging to a religion was with Judaism, at 0.54. Next was Buddhism, at 0.22. For the most part, this follows the rule that, the better educated a voter is, the more likely they are to vote Green.

The one notable exception is people who follow Spiritualism and New Age religions. This group is not particularly well educated, but they like to vote Green nevertheless. The correlation between being a Spiritualist or New Ager and voting Greens in 2020 was 0.34. The explanation is probably because Spiritualists and New Agers share with the Greens many anti-capitalist and anti-consumerist sentiments.

VariableVoting Greens in 2020
Living in an urban electorate0.30
Living on the North Island-0.08

Surprising to many is the fact that Greens voters in 2020 were significantly more urban than rural. Some might suggest that this shows the Greens to not really care much about environmental issues. A more plausible explanation is that educated people have to move to urban environments to get the jobs that make the most of their skills, and so it’s the fact that Green voters are highly educated that explains why they are so urban.

Green voters are slightly more likely to live on the South Island. These correlations reveal that their strongest support is in places like Christchurch, Dunedin and Nelson.

VariableVoting Greens in 2020
Working as a manager-0.04
Working as a professional0.75
Working as a technician or trades worker-0.50
Working as a community or personal service worker-0.03
Working as a clerical or administrative worker0.03
Working as a sales worker-0.09
Working as a machinery operator or driver-0.58
Working as a labourer-0.48

The most striking thing about Greens voters is how heavily represented they are among professionals. The correlation between voting Greens in 2020 and working as a professional was 0.75, one of the strongest between any party and any occupation. This is inevitable given how well-educated Greens voters and professionals both are.

There were significant negative correlations between voting Greens in 2020 and working as a machinery operator or driver (-0.58), as a technician or trades worker (-0.50) or as a labourer (-0.48).

These correlations might seem strange, given that the Greens are a firmly left-wing party and therefore are supposed to represent the working class. But the reality is that the Greens represent a specific part of the Establishment, namely the young, well-educated, globalist left whose parents vote National.

VariableVoting Greens in 2020
European0.19
Maori-0.27
Pacific Islander-0.19
Asian0.12

Many will also be surprised, given the virtue signalling that the Greens do around Maori issues, that there was a significant negative correlation (-0.27) between voting Greens in 2020 and being Maori. There was also a negative correlation between voting Greens in 2020 and being a Pacific Islander.

On the other hand, there were positive correlations between voting Greens in 2020 and being either a Kiwi of European descent or Asian. These correlations were not significant, but they reflected the general trend that the better-educated any one group of New Zealanders is, the more likely they are to vote for the Green Party.

VariableVoting Greens in 2020
< $5,000-0.01
$5,000-$10,0000.34
$10,000-$20,000-0.37
$20,000-$30,000-0.37
$30,000-$50,000-0.52
$50,000-$70,000-0.04
$70,000+0.52

That voting Green is not considered a working-class option is underlined by the fact that there is a negative correlation of -0.52 between voting Greens in 2020 and having an income of $30,000-$50,000. Someone working 2,000 hours a week, or close to it, at or just above minimum wage will be in the middle of this income bracket.

On the other hand, there was a strong positive correlation of 0.52 between voting Greens in 2020 and having an income of $70,000+. So many people in the top 15-20% of income are Greens supporters.

In summary, the typical Greens voter is young and urban, and is either a full-time student or has earned a postgraduate degree and is earning a full-time salary as a professional in a major urban centre. The correlation between voting Greens in 2020 and being female was 0.16, which was not significant, but which speaks of a leftist bias.

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This article is an excerpt from the upcoming 3rd Edition of Understanding New Zealand, by Dan McGlashan and published by VJM Publishing. Understanding New Zealand is the comprehensive guide to the demographics and voting patterns of the New Zealand people.

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If you enjoyed reading this essay/article, you can get a compilation of the Best VJMP Essays and Articles of 2019 from Amazon for Kindle or Amazon for CreateSpace (for international readers), or TradeMe (for Kiwis). A compilation of the Best VJMP Essays and Articles of 2018 and the Best VJMP Essays and Articles of 2017 are also available.

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