100 years of the minimum wage—Statistical comparison

Updated time

Last updated

21 February 2019

Please note the estimates of real GDP per capita and real AWE are indicative only. Caution is advised in interpreting comparisons over time.

Although a proportion of minimum wages to AWE above 100 per cent may seem unusual, as appeared to be the case from 1907 to around 1947, it should be noted that award coverage was low.

In A New Province for Law and Order in 1922 Justice Higgins wrote that 'even for men in regular work, the average was not more than 5s 6d per week.

This would mean that the standard was raised by over 27 per cent in 1907' (cited in Evans, R (2007), 'The Harvester Judgements and its Consequences'.

 

 

 

 

Year Real GDP per capita [1] Real AWE[2] Real minimum wage[3] AWE Adjusted AWE[4] Median weekly earnings of full-time employees[5] Average employee earnings (Bray 2013)[6] Award coverage[7] Wage system (see Methods of adjustment of the minimum wage)
  ($2017) ($2017) ($2017) (%)   (%) (%) (%)  
1907 15704.55 204.4 309.36 151.4 110.5     Federal effectively zero, State Awards substantial Commonwealth Conciliation and Arbitration Act 1904, the Harvester decision ‘living wage’ 1907. Minimum wage set in settling ‘industrial disputes’ 1908–2006.
1917 15130.16 200.74 249.84 124.5 90.9   84 (1914)   Realisation of need to maintain real value in minimum wage.
1927 15867.4 296.94 349.58 117.7 85.9   79 (1929) 30.6% state, plus perhaps 30% federal Automatic quarterly indexation 1921-1953, Harvester wage adopted across Australia.
1937 15959.96 290.85 344.48 118.4 86.5       The minimum wage cut by 10% because of the Great Depression. Then a ‘fresh start’ and prosperity loadings to reflect economic recovery
1947 18018.77 365.5 363.56 99.5 72.6   70 (1947)   Postwar period—Quarterly indexation until 1953, then wage indexation rejected 1953–1975, Commission to look at all economic indicators
1957 22537.58 485.2963 396.67 81.7 59.7     89.5 (1954) As above
1967 28949.58 600.2827 408.58 68.1 49.7   53 (1967) 87.4 (1968) 1967-1981 Commission concerned about 'three tiered wage system' (over-awards, industry agreements and minimum wage cases) instead of National Wage Cases being the source of increases. The total wage replaces the basic wage and margins
1977 36248.11 869.9581 594.16 68.3 49.9 67.0   87.0 (1974) Return of wage indexation 1975, three tiered system continues
1987 42002.91 911.6709 614.96 67.5 49.2 66.2 54 (1990) 85.4 (1983) Wage explosion 1981, Wage Pause 1982, wage indexation 1983-1986, end of 'three tiered system'. Reform of workplaces/awards from 1987-1988, enterprise bargaining from September 1991, awards a 'safety net' from 1993. Industrial Relations Act 1988, Industrial Relations Reform Act 1993
1997 51278.23 955.5562 597.7 62.5 45.7 61.9     Awards a 'safety net' with allowable matters, Workplace Relations Act 1996
2007 64557.8 1069.455 660.18 61.7 45.1 54.5 43 (2010)   WorkChoices 2005. Statutory wage fixing system based on corporations
2017 71171.14 1167.38 694.9 59.5 43.5 54.9     Fair Work Act 2009. Statutory wage fixing system based on corporations power
                   
Change % % % Ppts Ppts        
1907-1957 43.5 137.4 28.2 -69.6 -50.8        
1957-2017 215.8 140.5 75.2 –22.2 –16.2        
1907-2017 353.2 471.1 124.6 –91.8 –67.0        

Source: the Honourable Reg Hamilton and Grant Ellis.

[1] Real GDP per capita compiled from Hutchinson, D and Ploeck, F (2018), 'What Was the Australian GDP or CPI Then?', Measuring Worth

[2]The AWE for the period between 1921 and 1968-69 are based on the average annual earnings of employees in manufacturing and then from 1969-70 are based on the average earnings of employees in all sectors. Hutchinson and Ploeckl (2016) rebased the pre-1969-70 data using a ration of 0.9337 to link the two series together. The AWE is adjusted in real terms using the CPI under the RBA Inflation Calculator

Source: Data compiled from Hutchinson, D and Ploeck, F (2018), Weekly Wages, Average Compensation and Minimum Wage for Australia from 1861-Present, Measuring Worth

[3] The minimum wage from 1917 to 1967 are based on the Basic Wage for males as determined by the relevant authorities. From 1968 to 1997 the series is based on the C14 for males under the various Victorian metal industry awards. From 1998 to present the series refers to the Federal/National Minimum Wage. The minimum wage is adjusted in real terms using the CPI under the RBA Inflation Calculator

Source: Data compiled from Hon. Reg Hamilton, The History of the Australian Minimum Wage, Waltzing Matilda and the Sunshine Harvester Factory, Fair Work Commission

[4] The adjusted AWE is calculated as the product of the real AWE and a ratio of 1.37 representing the relativity between full-time adult average weekly earnings and average weekly earnings in November 2017

Source: AWE derived from H Hutchinson, D and Ploeck, F (2018); FT adult AWE from ABS, Average Weekly Earnings, May 2018, Catalogue No. 6302.0

[5] Calculated as the weekly C14 rate as proportion of the median weekly earnings of full-time employees in main job. This measure is commonly referred to as the minimum wage bite (see [2018] FWCFB 3500 at para.311)

Source: FWC, Statistical Report, Annual Wage Review 2017-18, Chart 8.3, p.42; ABS, Characteristics of Employment, Australia, August 2017, Catalogue No. 6333.0; ABS, Employee Earnings, Benefits and Trade Union Membership, Australia, various, Catalaogue No. 6310.0; ABS, Weekly Earnings of Employees (Distribution), Australia, various, Catalogue No. 6310.0

[6] See chart note at source below for information on how estimates for the various years were derived.

Source: Bray R (2013), Reflections on the Evolution of the Minimum Wage in Australia: Options for the Future, ANU SPI Working Paper 01/2013, October, Figure 3, p.14

[7] Award coverage refers to the proportion of all employees who are covered by federal and state awards. In 1907, federal award coverage was limited to a few awards and Harvester coverage was effectively zero as the Harvester Decision applied to one employer (H.V. McKay). It was subsequently overturned by the High Court of Australia. Data for the other years compiled from the sources below:

Source: Rimmer, M, Unions and Arbitration, in Isaac, J and Macintyre, S (2004), The New Province for Law and Order: 100 Years of Australian Industrial Conciliation and Arbitration, Cambridge University Press, pp.275, 287; Commonwealth Bureau of Census and Statistics, Quarterly Summaries; Butlin, M, Dixon, R and Lloyd, P, Statistical Appendix: selected data series, 1800-2010, in Ville, S and Withers, G (2014), The Cambridge Economic History of Australia, Cambridge University Press; Australian Industrial Relations Law and Systems (1985), The Hancock Report, Report of the Committee of Review, Volume One, Table 6.1, p.252

Comparable changes in the real minimum wage, AWE, GDP

Over the more than 100 years of the minimum wage (1907–2010), it has more than doubled in real terms (214%). By comparison, movements in real gross domestic product (GDP) per person have increased four and a half times (454%), while real average weekly earnings (AWE), have increased nearly four times (394%).

Wage bite

The ‘wage bite’ of the minimum wage compared to average weekly earnings has consistently reduced from a very high base.  A number of qualifications have to be made in relation to this conclusion.

  • Firstly, there is some uncertainty about the accuracy of earlier statistics.
  • Secondly, there is evidence that the Australian workforce has grown more skilled[8].
  • Thirdly, the Harvester wage of 1907 was set on the basis of what was ‘fair and reasonable’ for one large factory which conceded ‘capacity to pay’, not on an economy wide basis.  Only later was it applied on an economy wide basis.
  • Fourthly, the challenges that those fixing the early minimum wages faced were very different to those today, and the award wage was usually the actual wage that workers took home.
  • Finally, the Australian economy was closed and less open to international trade and the minimum wage system might have reflected that environment to some extent.

In any event, the role of the minimum wage over 100 years has changed considerably in social and economic terms.

[8] Australians, Historical Statistics, Wray Vamplew (ed.), 1987, p.148