For as long as I can remember there has been tension between employers wanting to keep wages low and employee advocates like unions fighting to increase salaries. And, as more and more people move from permanent to casual employment, hourly rates are becoming increasingly important for prospective employees. So, what’s a good hourly rate in Australia?
Changing Workforce
Australia’s casual workforce sits at about 25 percent according to data from a recent government research paper. I was surprised by that number, mainly as it has barely moved over the last 20 years aside from a big jump during the 1990s. However, it also doesn’t include the number of people who have moved from full-time employment into independent consulting and contracting.
Those numbers are harder to uncover as many of those workers run their own businesses and, from a tax perspective, look like full time employees of their own businesses, even though they move from job to job across different employers or clients.
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What Does The Law Say About Wages?
The Fair Work Commission recently increased the minimum full-time wage for Australian adults from $694.90 per week ($18.29 per hour) to $719.20 per week ($18.93 per hour). That gives us a baseline to work from.
But that only kicks in once you turn 21. For younger workers, you need to take the full adult rate and scale it like this.
- under 16 years: 36.8%
- 16 years: 47.3%
- 17 years: 57.8%
- 18 years: 68.3%
- 19 years: 82.5%
- 20 years: 97.7%
(Source: Mywage.org)
That gives us some idea about minimum wages.
There are also award rates, that have been negotiated through unions. For example, the hospitality industry uses the minimum wage as directed by the Fair Work Commission as the basis for different roles. So, depending on what job you do, you could earn more than the minimum. The Fair Work Commission has a list of the various award pay rates for different industries on their website.
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What Do You Spend?
The amount spent by each household is dependent on a large number of factors. For example, if you have a mortgage you took out in the last year, based on recent averages, you’re probably paying between $2000 and $3000 per month. But if you’ve been in your home for 20 years and are still paying off your original loan you may only be paying a fraction of that amount.
Average Australian rents, although they vary from city to city, fall into those ranges as well.
Utilities and other household expenses can vary substantially. In my household, power, gas, water, phones, car running expenses, food, clothing, donations and other basics easily exceed $1500 per month. We’re a blended family with five kids who are in and out at different times.
When you put all that together and then compare it to the minimums suggested by the Fair Work Commission, it’s easy to see how even a two-income household can struggle to make ends meet.
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What Is A Good Hourly Rate?
Obviously, there will be some variation to this as we all have different expectations about living standards and expenses.
But, if you assume you need $1000 per week, after tax, to get by based on average mortgages or rental charges, food and other basics, and a little left over for entertainment, you can see the Fair Work Commission’s minimum of $719.20 per week, which is a pre-tax amount, won’t cut it.
To end up with $1000 in you hand after tax and your employer puts in the mandatory superannuation guarantee money, you need a gross weekly salary of $1280 per week. That’s $33.68 per hour assuming your work a 38 hour week as per the Fair Work Commission’s guidelines for the minimum wage.
But that’s a “getting by based on the averages” pay. Whether you think that’s good or not is a different question.
I recently wrote about how to set your rate if you’re self employed and I think similar rules apply when you’re determining what a good hourly rate is for you.
I think a good hourly rate is one that covers all your bills and allows you to set some money aside for fun things. Whether that’s buying the latest gadget or taking an annual holiday – a good wage is one that lets you live comfortably, have some margin for unforeseen expenses and allows you to enjoy some leisure time however you like.
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