Daymark Community Monitor Income Perceptions 2011 Final

Daymark Community Monitor

It’s all relative: what it means to be low and

middle income in Australia June 2011


Community attitudes: Low and middle income Australia ©Daymark Public Relations 2

About the Daymark Community Monitor

Daymark is a specialist public relations agency which helps clients navigate their way through tough

reputational issues.

This survey is one in a regular series of “community monitors” that looks at the community view of

emerging public issues. Emerging public issues are ones that are just appearing on the radar of

organisations, commentators, regulators or government. They are issues which have the potential

to impact the reputation of institutions held close to the heart of the Australian public.

The aim of the Daymark Community Monitor is to inform the debate around emerging community

issues so they can be discussed in a common-sense way. The research is commissioned

independently of any Daymark client. The full survey results and questions are detailed in this

report.

The first Daymark Community Monitor examined community views on sports betting in Australia.



Executive summary

The question that this Daymark Community Monitor seeks to address is who in Australia thinks they

are low and middle income and how does this compare to actual low and middle income

households?

Every day Governments of all persuasions appeal to low and middle income households. Household

income is being used to describe certain sections of the public and it is not clear that this message is

being accurately received by the real low and middle income households across the country.

We have used a well-accepted definition of income status which equates low income households as

having a gross annual income of around $44,000, middle income households earning around

$85,000 and high income households earning above $173,000.

This Daymark Community Monitor surveyed 1500 people and found that:

• People over-estimate the number of households living on a low income in Australia:

respondents estimate that 46% of households – or nearly half of Australian households - are

low income, 32% middle income and 22% high income.

• Many more people consider they live in a middle income household (56%) than believe

there are middle income households in Australia (32%).

• The opposite holds for consideration of low income households: 39% of respondents

identified themselves as low income and overall thought 46% of Australia is low income.

• Combined the data shows that 95% of people think they are either a low or middle income

household and believe that 78% of households in Australia are low and middle income.

• People’s view of what constitutes low and middle incomes stretches across many income

brackets. For example, 28% of households earning above $250,000 consider themselves as

middle income, while 83% of $150,000 households consider themselves as middle income.

The problem of “talking to” low and middle income Australia becomes immediately apparent. Many

more people think they are low and middle income than is the case through a stricter demographic

or economic measure.

The reverse also holds: when the term high income is used, the vast majority of Australian

households believe it does not apply to them and, given the status ranges we have found, never will.

This has implications for how the impact of government initiatives are understood and assessed by

the community. At a higher level it has an impact on how Australians appreciate their status relative

to others. The research shows that we are better off than we generally think we are.



Introduction

A consistent feature of the debate around Government policy of all persuasions is the impact that

different policies will have on low and middle income households across Australia.

Low in middle income households are variously singled out for special measures to relieve cost of

living pressures or financial impacts from new taxes or levies, or indeed to receive specific welfare

support.

The Daymark Community Monitor asks two questions:

• Who in Australia thinks they are low and middle income?; and

• How does this perception compare to the actual low and middle income households when

there are public announcements directed at such households?

We chose this topic for our second Community Monitor because income has always been an

important differentiator in who receives help from governments. What we are seeing, however, is

income being used to describe certain sections of the Australian public and it is not at all certain how

this message is being received by the community.

We look specifically at this issue from the perspective of households with a gross income of $60,000

per year and $150,000 per year. Do these households consider themselves “low income”, “middle

income” or “high income”?

About the survey

An online survey of a representative sample of 1501 respondents across all Australian States was

conducted by The Digital Edge on behalf of the Daymark Community Monitor over the period 17 - 19

May 2011. The sample was proportionally spread by State, gender and income. All data and

questions from the survey are detailed in the back of this report.

< $20k, 107

$20k to $40k,

271

$40k to $60k,

253

$60k to $80k,

223

$80k to $100k,

168

$100k to $120k,

127

$120k to $150k,

115

$150k to $250k,

64

> $250k, 14 Not stated, 159

Respondents by gross household income



For the purposes of some of the analysis in this report, the “prefer not to say” income category (“not

stated” in the graph above) was omitted so that proper comparisons could be made.

The survey asked respondents:

• Whether they considered their household to be low, middle or high income;

• What gross level of annual household income they considered as being low, middle and

high;

• What proportion of households they thought were living on low and high incomes.

For the purposes of this survey we have looked at income perceptions across all the income

categories captured in the survey demographics and have also singled out two income brackets to

assist our analysis: household incomes between $120,000 and $150,000 (referred to as $150,000

income households) and household incomes of $40,000 to $60,000 (referred to as $60,000 income

households).

Who are low and middle income Australians?

There is no succinct and completely accepted definition of what constitutes a low or middle income

household. There are however some accepted notations.

One accepted benchmark – as widely used by the Australian Bureau of Statistics - is done on a decile

classification of the Australian population. Deciles place equal numbers of a population into ten

groups. The first decile contains the bottom 10%, the second decile the next 10% and so on.

By this measure, low income households are considered the 20% of households with incomes in the

second and third deciles. Middle income households are those in the fifth and sixth deciles, and high

income households as those in the ninth and tenth deciles (ABS).

A review of gross weekly cash income of households by decile (ABS Census data 2006) places low

income households with a gross annual income of around $44,000, middle income households at

$85,000 and high income households above $173,000.

Although the census data is not accurate here, we estimate from the data we have reviewed that

that there are 75% to 80% of Australian households earning under $150,000 and 40% to 45% of

households earn less than $60,000.

The prevalence of low and middle income households

Of the respondents surveyed, 39% considered themselves to be living in low income households, a

further 56% considered themselves to be living in middle income households and the remaining 5%

considered themselves to living in a high income household.

Respondents also estimated 46% of households in Australia are low income, 22% high income and

the remaining (by inference) 32% as middle income.



The range in which people consider themselves as low income stretches from respondents on less

that $20,000 out to the $80,000 bracket: 22% of people earning $60,000 to $80,000 considered

themselves as low income households.

The income range over which people consider themselves as middle income is also wide: 48% of

those earning between $40,000 to $60,000 consider themselves as middle income and 27% of

households earning above $250,000 consider themselves as middle income.

These figures can be compared to the decile definition of low and medium income (see Introduction)

which puts a low income household at $44,000, medium income at $85,000 and high income above

$173,000.

39

56

5

46

32

22

0

10

20

30

40

50

60

Low income Middle income High income

Perceived income status (%)

Respondents view of their

household

Respondents estimate of

households (ave)

0102030405060708090

100

% people who say household is low, middle or high

income by actual income

% say high income

% say middle income

% say Low income



A closer look at $60,000 and $150,000 income households

Two income brackets have been selected for closer consideration in this Daymark Community

Monitor: households with a gross annual income of $60,000 and households with a gross annual

income of $150,000.

In terms of their income status, 51% of $60,000 households consider themselves low income, while

34% consider themselves as middle income.

83% of $150,000 households consider themselves as middle income, and 13% consider themselves

as high income.

Even with a $90,000 difference in household income there is little difference in the perceived

breakdown of income status across Australia. Both income brackets estimate the prevalence of low

income households at around the mid-40% mark, middle income around the mid-30% mark and high

income at around 20%.

Overall though, respondents over-estimated the percentage of low income households in Australia.

Household income does have an impact over people’s perceptions as to what income qualifies as

low, middle and high status.

$60,000 households underestimate where an economic or demographic definition of middle and

high income starts by $20,000 to $30,000 (that is they estimate that middle and high income status

starts at a lower level than is generally accepted).

$150,000 households are better at estimating what household income may be considered a low

income, but have a distorted view as to when high income kicks in. 16% of households with an

income of $150,000 believe $150,000 to be low income.

46 4842

32 3434

22 18 24

0%10%20%30%40%50%60%70%80%90%

100%

Respondents

estimate of

households (ave)

$60,000

households

$150,000

households

Estimated % of households, overall and by two income

brackets

High income

Middle income

Low income



What does all this mean?

Even through a relatively simple survey we can see that respondents have a skewed view of what it

means to live in a low, medium or high income household.

A very significant portion (95%) of the population thinks they are low or medium income household

whereas in an economic sense this is simply not the case. The reverse also holds: when the term

high income is used, the vast majority of Australians think it does not apply to them and never will.

This has implications for how the impact of government initiatives are understood and assessed by

households.

At a higher level the survey has importance with respect to how Australians appreciate their status

relative to others. The research shows that we are better off than we tend to think we are.

0%10%20%30%40%50%60%70%80%90%

100%

Income status as viewed by $60,000 income households

High income

Middle income

Low income

0%10%20%30%40%50%60%70%80%90%

100%

Income status as viewed by $150,000 income households

High income

Middle income

Low income



Questionnaire

Conducted by The Digital Edge for Daymark on 17th to 19th May 2011

1. How would you describe the income “status” of your household? (household income refers to the

combined income of you and your partners or your income if you are not married or in defacto relationship)

a) Low

b) Middle

c) High

2. What level of gross annual household income would you describe as being “low income”?

a) Less than $20,000

b) $20,000 to $39,999

c) $40,000 to $59,999

d) $60,000 to $79,999

e) $80,000 to $99,999

f) $100,000 to $119,999

g) $120,000 to $149,999

h) $150,000 to $249,999

i) $250,000 or more

3. What level of gross annual household income would you describe as being “middle income”?


b) $20,000 to $39,999

c) $40,000 to $59,999

d) $60,000 to $79,999

e) $80,000 to $99,999

f) $100,000 to $119,999

g) $120,000 to $149,999

h) $150,000 to $249,999

i) $250,000 or more

4. What level of gross annual household income would you describe as being “high income”?


b) $20,000 to $39,999

c) $40,000 to $59,999

d) $60,000 to $79,999

e) $80,000 to $99,999

f) $100,000 to $119,999

g) $120,000 to $149,999

h) $150,000 to $249,999

i) $250,000 or more

5. There are about 8.4 million households in Australia. What proportion do you think are living on low

incomes? (please enter your response as a percentage)

6. And, what proportion to you think are living on high incomes? (please enter your response as a

percentage)

Daymark Community Monitor Income Perceptions 2011 Final

Economy & Finance

Transcript of Daymark Community Monitor Income Perceptions 2011 Final