How Absolutely Fucked Young Kiwis Are

Everyone knows that the housing situation is bad, but few realise exactly how bad it is. Politicians only propose tinkering around the edges; no-one is willing to propose fundamental change. However, as this article will show, the situation is bad enough that only fundamental change can fix it.

Statistics nerds were overjoyed by the release of the updated Parliamentary profiles last month. These profiles contained information from the 2018 Census, allowing us to update our knowledge of each electorate.

One important thing the Parliamentary profiles tell us is how wealthy each electorate is. We know that 648,537 people out of 3,776,355 aged over 15 in the General Electorates and 66,126 people out of 597,498 aged over 15 in the Maori Electorates make over $70,000 a year. This equals 714,663 people out of 4,373,853, or slightly more than 16%.

Being in the top 16% means that anyone making $70,000 a year is creaming it in comparison to the average Kiwi worker. They’re getting paid much better, and will likely have a commensurately harder job. Either they’re working much longer hours than average, or they have a job with a greater than average level of responsibility, or they are applying much greater than average human or industrial levels of capital.

However, even on this top 16% income, it’s all but impossible to own a house.

If you earn $70,000 a year in New Zealand, you will pay about $15,000 in taxes. That will leave you with $55,000 a year – assuming you opt out of KiwiSaver, otherwise you’d be down to $52,000 a year. That isn’t a lot of money once the high cost of living is factored in.

The cost of living in New Zealand can be estimated by the New Zealand Government’s own cost of living calculator. New Zealand isn’t a cheap country to live in. It can be seen from using the calculator that the average Auckland family of two adults and two dependent children has living expenses of around $2,000 a week.

This means that one working adult in the top 16% of Kiwi wage-earners only makes half of what they need to keep the average family running. If that sounds paradoxical, that’s an indicator of how fucked young people in New Zealand are now.

If we change the calculations to two working adults, each earning a wage in the top 16%, things become a bit easier. But even with two working adults both earning such a wage, it’s extremely difficult for a family with two children to save any money. According to the cost of living calculator, a family of two parents and two children can expect that their living expenses will be in the neighbourhood of $2,000 a week.

This means that a family with two parents and two children, where both parents are in the top 16% of wage-earners, saves no money on a weekly basis. All that work is just to stand still. The family will never own its own home, not even with two adults working and only two children. And that is even if both adults are earning in the top 16% of wages.

Now let’s consider a family with a special talent for living frugally. Let’s say both adults have unusually high levels of determination, willpower and resourcefulness, and they are capable of making do with considerably less than the average family of two children.

In this case, we can take the cost of living calculator and reduce the expenses to the lowest 25% or so of all families of four. This involves taking the sliders and setting them halfway between the average expenditure and the absolute minimum required to survive.

This gives us expenses of $200 per week for food and alcohol, $30 for clothing and footwear, $360 for housing and household utilities, $38 for household contents and services, $13 for health, $121 on transport, $22 on communication, $62 for recreation and culture, $25 for education, $81 for miscellaneous spending and $124 for other expenditure.

This gives us a total of $1,080 per week in expenses for a family of four. So our husband and wife duo of professional workers, both in the top 16% of Kiwi wage earners, if they cut their family expenses down to the bottom 25%, can expect to save around $950 a week, or close to $50,000 a year.

The average house price in New Zealand as of July this year was $739,000. So if a family can manage to have two breadwinners both earning in the top 16% of all wages, and if they can manage to cut their expenses down to the lowest 25% of all families of four, they can expect to own the average house after 14.8 years.

Let’s say, more realistically, that the partner of the main breadwinner works part-time in order to look after the two children, and so makes $30,000 a year. This would leave them $400 a week after expenses, or around $20,000 a year. At such a rate of saving they could expect to own their own home after 37 years.

Let’s say, even more realistically, that their expenses are at the average level for a family of four in Auckland. In such an instance, they will be unable to save money even if both parents are working and earning in the top 16% of wage earners. According to the cost of living calculator, a family of four in such circumstances will have to borrow $50 a week to be able to live. Saving will be impossible.

And that’s for people in the top 16% of earners.

Even if a person and their partner are in the top 16% of earners, they will have to cut their expenses down to less than average merely to save any money at all. They will have to cut those expenses to far less than average to save enough to own a home. Anyone earning less than this, or anyone whose expenses are higher than this, will never own a home, not even if they worked to age 100.

Simply put, you have to earn far, far more than average if you want to own your own home in New Zealand. The dream of home ownership is now only a reality for a fraction of the population. The rest of us are effectively serfs, doomed to labour our whole lives without ever owning land.

To compare this with how the previous generations had it, in 1992 the average New Zealand house price was $105,000. Also in 1992, the average wage was $15. So in 1992, the average house could be purchased for the equivalent of 7,000 hours of labour. Today, with an average house price of $739,000 and an average wage of $34, buying the average house requires the equivalent of over 21,000 hours of labour.

There simply aren’t enough years in one lifetime for the average Kiwi to save enough money to own their own house. Either you inherit, or, failing that, become a professional worker with an income of $150,000+ per year.

Another way of looking at it is that if house prices had only increased in proportion to the increase in the average wage between 1992 and 2020, i.e. 2.25 times instead of 7 times, the average house price today would be around $236,000.

The grim reality is that we are some two-thirds poorer than our parents were. This conclusion is inescapable unless one denies the maths.

In summary, the Millennials and the younger generations have been effectively enslaved by the Boomer generation. The Boomers own everything, and they pay such pitiful wages that we have no chance of bettering our positions. Only two outcomes can give the young of New Zealand basic dignity: wait 30 years for the Boomers to die, or revolution.

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If you enjoyed reading this essay, 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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