Summary of main findings
This section summarises the main findings in the analyses of before and after-housing income poverty, subjective poverty and financial stress.
Income poverty
The main findings on income poverty are summarised below.
Incidence and persistence
- Approximately 15 per cent of Australian households were in income poverty on the before-housing and 18 per cent on the after-housing measure. These figures are slightly higher than for individuals (13 and 17 per cent) since larger households tend to have higher incomes. The level of after-housing poverty is higher because the distribution of equivalised disposable income is more skewed when housing costs are taken into account.
- Persistent income poverty in the first two waves of HILDA was considerably lower than annual rates. About 7 per cent of households were in income poverty in both waves on the before-housing measure and about 9 per cent on the after-housing measure.
Sex
- Women tended to have higher levels of income poverty than men. Persistent income poverty (lasting more than two years) among women was about 3 percentage points higher than for men. However, when labour market variables are taken into account (for example, occupational status and proportion of time spent working and unemployed), men are more likely to be in income poverty than women.
Age
- The relationship between age and income poverty differed according to the measure used. On the before-housing measure, the two oldest cohorts (over 65 years) had the highest poverty rates, whereas these age cohorts were not so distinctive on the after-housing measure. The youngest age cohort (18 to 24 year-olds) had relatively high levels of income poverty on both measures, and 25 to 34 year-olds had the lowest rates of before-housing income poverty. Multivariate analyses showed that age was positively related to before-housing income poverty but negatively related to after-housing income poverty. This reflects the generally lower housing costs of older Australians. These findings indicate that using both before and after-housing measures provide a more comprehensive account of the relationship between age and income poverty.
Ethnicity
- Multivariate analyses showed that both a non-English speaking background and Indigenous status increased the odds of income poverty.
Socioeconomic background
- On average, the socioeconomic backgrounds (measured by parental occupational status) of the groups in income poverty were only slightly lower than for the groups not in poverty. In multivariate analyses, the effect of socioeconomic background on income poverty was weak.
Household type
- Of the household types studied, couples with older children (over 15 years) had the lowest income poverty rates, followed by couples with younger children and couples without children. Lone-parent households had the highest income poverty rates, especially on the after-housing measure. About 17 per cent of lone parents were in after-housing income poverty in both waves. The comparable figure for couples with young children was 7 per cent. Single-person households had the highest income poverty rate on the before-housing measure.
Marital status and children
- On both income poverty measures, income poverty was low among those who were married or in de facto relationships. On the before-housing measure, income poverty was highest among widows and widowers, but on the after-housing measure, the poverty rate for this group was similar to that for the separated, divorced and single (those who had never married and were not in a de facto relationship) groups.
- Multivariate analyses showed that marital status was strongly associated with income poverty. Its effects were stronger than for educational qualifications. Being married or in a de facto relationship substantially decreased the odds of income poverty, even when controlling for labour market experiences and wealth. Single and separated people were more likely to be in income poverty. Widowhood was associated with substantially lower odds of income poverty compared to single-person status.
- Having a larger number of children moderately increased the odds of income poverty, but the effects were much weaker than for marital status.
Education
- Income poverty declined with higher levels of education. Income poverty among bachelor degree holders and those with postgraduate qualifications was particularly low. Poverty rates were highest among those who had not completed school and next highest among those whose highest qualification was school completion (Year 12) or a Technical and Further Education (TAFE) certificate.
- In multivariate analyses, educational qualifications had strong effects on income poverty. The fairly strong protective effects of postgraduate qualifications and bachelor degrees against income poverty were still apparent when controlling for labour market variables and wealth.
Labour market experience
- Income poverty was strongly associated with labour force status: about 33 per cent of the unemployed were in poverty on the before-housing measure, and nearly 45 per cent on the after-housing measure. Of those who were unemployed and looking for full-time work in Wave 2, nearly 30 per cent were in after-housing poverty in both waves. The comparable figure for full-time workers was less than 3 per cent and for part-time workers was about 8 per cent.
- There were larger differences in between those in income poverty and those not in income poverty by occupational status (of present or previous job). The average occupational status of those in income poverty was about 10 to 12 points lower (on a zero to 100 point scale) than for those not in income poverty. Multivariate analyses indicated that the occupational status of present or prior job was moderately associated with income poverty.
- Spending time working since leaving full-time education decreased the odds of being in income poverty, whereas being unemployed increased the odds. However, the importance of these factors was limited to those who had spent relatively little time working or considerable time unemployed.
Wealth and debt
- On average, the level of wealth among those in income poverty was about half that of those not in income poverty.
- The average levels of debt of the in-poverty groups were substantially lower than for comparison groups. Assets among the groups in poverty were much greater than debts. Median debts of the in-poverty groups were close to zero.
- Wealth lowered the odds of income poverty, but the association was weaker than expected. Small differences in wealth did not substantially change the odds of income poverty. The effect of a difference of $1 million in wealth on income poverty was less than the effect of marriage.
Subjective poverty
The main findings on subjective poverty are summarised below.
Incidence and persistence
- Approximately 5 per cent of Australian households judged themselves as poor or very poor (subjective poverty).
- Only 2 per cent were in subjective poverty in both waves.
Sex
- In contrast to income poverty, a higher proportion of men than women were in subjective poverty.
- Multivariate analyses showed that men were more likely than women to be in subjective poverty. The difference between sexes increased when controlling for labour market factors.
Age
- The oldest cohort displays very low levels of subjective poverty (less than 2 per cent) of subjective poverty. On average, households in subjective poverty were younger.
- The tendency for younger households to be in subjective poverty could not be attributed to differences in labour market experiences, income or wealth.
Ethnicity
- In contrast to the findings for income poverty, there was no consistent relationship between subjective poverty and a non-English speaking background. However, Indigenous status was again strongly associated with increased odds of being in subjective poverty.
Socioeconomic background
- Subjective poverty was only weakly associated with socioeconomic background. Multivariate analyses showed no significant differences.
Household type
- Lone-parent households were more likely to judge themselves as poor or very poor. About 10 per cent were in subjective poverty in each wave, but only 5 per cent were in subjective poverty in both waves. Single-person households had the next highest level of subjective poverty. Couple households (with and without children) had much lower levels of subjective poverty.
Marital status and children
- Subjective poverty was very low among those who were married or widowed. It was only slightly higher among those in de facto relationships, and was highest among those who were divorced or separated, followed by single people.
- The effects of number of children and occupational status (of present or prior job) on subjective poverty were similar to their effects on income poverty.
Education
- Educational qualifications did not have as strong an effect on subjective poverty as on income poverty. Non-completion of school increased the odds of subjective poverty, but the difference was no longer significant when controlling for labour market experiences.
Labour market experience
- Subjective poverty was strongly associated with labour force status. About 20 per cent of those who were unemployed and looking for full-time work considered themselves as poor or very poor in each wave, but only 6 per cent in both waves. Unemployed people looking for part-time work also had high levels of subjective poverty. Subjective poverty was high among those not in the labour force but marginally attached to the labour force (wanting to work, but not looking for work or unable to start work). Subjective poverty among full-time workers was very low at around 2 per cent.
- Differences in occupational status (of present or previous job) between the groups in and not in subjective poverty were smaller (about eight units) than the differences found for income poverty.
- A higher percentage of time spent working since leaving full-time education decreased the odds of subjective poverty, but to a lesser extent than for income poverty. Spending time unemployed increased the odds of subjective poverty. Again, the effects of these factors were only significant for the small proportion of respondents who had spent little time working or considerable time unemployed.
Income, wealth and debt
- The average household income of the subjective poverty groups was about half that of the comparison groups. These differences were smaller than the income differences for income poverty since income poverty is based on household income.
- Having a relatively high equivalised disposable household income decreased the odds of subjective poverty, although the effect was not particularly large.
- On average, the wealth of the subjective poverty groups was between 20 and 25 per cent that of the comparison groups. This compares to about 50 per cent for the income poverty groups. These findings indicate that wealth was more closely associated with subjective poverty than with income poverty.
- The average level of debt among the subjective poverty groups was also substantially lower than for comparison groups, and was generally lower than for the income poverty groups. The median debt of the subjective poverty groups was only slightly above zero.
Financial stress
The main findings on financial stress are summarised below.
Incidence and persistence
- Approximately 18 per cent of Australian households in Wave 1 and 16 per cent in Wave 2 had two or more incidences of cash flow problems (financial stress).
- About 10 per cent had two or more incidences of cash flow problems in both waves.
Sex
- Financial stress was slightly higher among women than men. However, multivariate analyses revealed no statistically significant differences between the sexes.
Age
- Financial stress was much more common in the youngest cohort (18 to 24 year-olds) at around 40 per cent. The level of financial stress declined in each successive older cohort to about 5 per cent in the oldest cohort (over 70 years). This contrasts with the findings for the other measures, especially before-housing income poverty, where older people were more likely to be in poverty.
- Increases in age strongly reduced the odds of financial stress. This effect could not be accounted for by differences in education, marital status, labour market experiences, wealth or household income.
Ethnicity
- Having a non-English speaking background increased the odds of financial stress, but not to the same extent as for income poverty. Its effects were not always statistically significant.
- Indigenous status strongly increased the odds of financial stress. However, its effect was no longer significant when education and marital status are taken into account.
Socioeconomic background
- On average, the socioeconomic backgrounds of the groups in financial stress were only slightly lower than for the comparison groups.
- In multivariate analyses, socioeconomic background was only weakly associated with financial stress and its effect was no longer significant when controlling for educational qualifications.
Household type
- The incidence of financial stress was highest among lone-parent households. About 25 per cent of lone-parent households were in financial stress in both waves. This compares to about 10 per cent among couples with young children and 6 per cent among couples with older children. Single-person households also showed high levels of financial stress.
Education
- Financial stress declined with higher educational qualifications. It was lowest among those with diploma, bachelor degrees or postgraduate qualifications.
- Multivariate analyses showed that a postgraduate qualification or degree substantially reduced the odds of financial stress.
Marital status and children
- Financial stress was lowest among the widowed, with about 6 per cent of widows or widowers in financial stress. This compares with about 10 per cent of those who were married, 25 per cent of those in de facto relationships and 30 per cent or more among those who were separated, divorced or single.
- Marriage strongly reduced the odds of financial stress. Its effects were stronger than those of education. Widowhood also reduced the odds of financial stress. Being in a de facto relationship had much weaker effects on financial stress than on income poverty.
- The effects of number of children on financial stress were much stronger than on income poverty and subjective poverty.
Labour market experience
- Financial stress was also strongly associated with labour force status. Over 40 per cent of the unemployed were in financial stress in each wave, compared to about 15 per cent for full-time workers. It was lowest among the group not in the labour force and not marginally attached to the labour force. This group consisted mainly of retired people.
- Differences in occupational status (of present or previous job) between the groups in and not in financial stress were similar to the differences found for income poverty.
- Higher occupational status reduced the odds of financial stress, which was similar to its effects on income poverty and subjective poverty.
- A higher percentage of time spent working since leaving full-time education decreased the odds of financial stress, but to a lesser extent than for income poverty. A higher percentage of time spent unemployed increased the odds of financial stress. Again, the effects of these factors were only significant for the small proportion of respondents who had spent little time working or considerable time unemployed.
Income, wealth and debt
- Average household incomes of groups in financial stress were higher than for groups in subjective poverty (and, of course, the income poverty groups), suggesting that financial stress is not just confined to low-income households.
- Similarly, multivariate analyses showed that having a relatively high level of household equivalised disposable income modestly decreased the odds of financial stress.
- On average, the wealth of financial stress groups was higher than that of subjective poverty groups but lower than that of income poverty groups.
- Wealth had stronger effects on financial stress than on income poverty, but not as strong as its effects on subjective poverty.
- Household debt was higher among the groups in financial stress than among the groups in income poverty. However, mean debt was about 20 to 25 per cent of mean assets.
Interrelationships between indicators
Generally, the interrelationships between indicators, and the performance of the same indicators over time, were weaker than expected.
The correspondence between the two income poverty measures was lower than expected. Of those classified as being in income poverty on the before-housing measure, only 80 to 85 per cent were in income poverty on the after-housing measure. The correspondence in the other direction was greater since the incidence of after-housing income poverty is higher. Of those in after-housing poverty, about 60 to 65 per cent were also in before-housing income poverty.
- About 40 per cent of those in before-housing income poverty in Wave 1 were also in before-housing income poverty in Wave 2. For the after-housing poverty measure, the comparable figure was 50 per cent.
- Over half of those who said they were poor in Wave 1 said they were more prosperous in Wave 2.
- On the single indicators of financial stress, more than half of those who were in financial stress on an item in Wave 1 were not in financial stress on that item in Wave 2. The correspondence across waves tended to be weaker for the more severe indicators of financial stress.
- About 66 per cent of those who judged their households as poor were in financial stress.
- Of those in before-housing income poverty, only 25 to 30 per cent had two or more cash flow problems. This increased to between 32 and 34 per cent on the after-housing measure.
- Defining financial disadvantage by combinations of income poverty, subjective poverty and financial stress substantially reduces the estimate of the percentage of financially disadvantaged households. About 4 per cent of households were in before-housing income poverty and financial stress and 6 per cent in after-housing income poverty and financial stress. Only 1 per cent of households were in these situations in both waves.