Survey: Family Income and Employment Dynamics

Preliminary results from the Survey of Family Income and Employment (SoFIE) were released recently. SoFIE is NZ's first-ever national survey designed to study individual, family and household income, how this income changes, and the factors that influence these changes such as involvement in the labour force or family composition.

SoFIE is a "longitudinal" survey, which means that the respondents (over 22,000 of them) will be revisited over seven years to measure how their individual and family circumstances change over time. This kind of survey provides a quite complete picture of participants' lives, enabling the study of questions like:

  • Do people with low incomes continue to have low incomes?
  • What is the pattern of income over time as people go through life?
  • How do income levels for families and individuals change, and what are the factors that drive this change?
  • What are the patterns of participation in the labour market over time?
  • How do factors such as participation in education and training, and having children affect participation in the labour market and income levels?
  • How long do people stay in the same job?
  • How long do people spend looking for work?

Changes in Labour Force Involvement

Respondents were asked to construct a timeline of their involvement in the labour force over the previous year. They were asked to include the start and end dates of periods of employment; of being not employed but seeking work; and of being not employed and not seeking work (that is, being retired, studying, providing childcare, etc). The main findings include:

  • 72 percent of people were involved in just one type of labour force activity over the year;
  • 79 percent of employed people were employed for the whole year; and
  • of those who were not working but seeking work, 66 percent spent less than 26 weeks involved in this activity.

How Weekly Employee Earnings have Changed over the Year

Three groups of weekly employee earnings have been created: "lower earnings" (those who earn less than $345); "middle earnings" (earning between $345 and $574); and "higher earnings" ($575 or more per week). The main findings include:

  • 90 percent of people did not change their weekly employee earnings group over the year;
  • of those with weekly employee earnings of less than $345, 85 percent remained in this group over the year;
  • overall, people were more likely to move up an earnings group than move down an earnings group;
  • people in the 15-24 and 25-44-year age groups were more likely to change their level of weekly employee earnings than those in other age groups; and
  • males were more likely than females to change their weekly employee earnings over the year.

Characteristics of People Earning Less than $345 a Week

SoFIE measures the length of time individuals have spent on a particular level of employee earnings. These periods of time at a constant level of earnings are called "spells". New spells can be triggered by a number of different events: a change in job or employer, promotion or significant pay increase, or a change in the number of hours worked (for example, from part-time to full-time hours). The main findings include:

  • females were more likely than males to have spells of earnings of less than $345 per week;
  • females (41 percent) were also more likely than males (17 percent) to have more than one spell of earnings at this level;
  • by occupation, legislators, administrators and managers were the least likely to have spells of weekly employee earnings of less than $345;
  • over half (58 percent) of service and sales workers had at least one spell at this level; and
  • nearly half (46 percent) of those who earned less than $345 spent less than 13 weeks at this level.

How Weekly Income Changes over the Year

Three groups of weekly income have been created: "lower income" (less than $242); "middle income" (between $242 and $402); and "higher income" ($403 or more). The main findings include:

  • income levels were relatively stable (87 percent of people remained in the same income group over the year);
  • of those who started the period with a weekly income of less than $242 a week, 81 percent were still at this level by the end of the year;
  • overall, the likelihood of experiencing a drop in income to a level below $242 per week was relatively low (5 percent);
  • the likelihood of moving into a spell of income of less than $242 a week decreased as age increased;
  • people aged 25-44 years had the highest likelihood of any age group of moving out of a period of income of less than $242 a week;
  • Maori had the highest likelihood of any ethnicity of moving into a spell of income of less than $242 a week (8 percent); and
  • Maori also had the highest likelihood (25 percent) of moving out of a spell of income of below $242.

Distribution of Annual Personal and Family Income

These results look at how income is distributed across the population. All incomes are reported as gross (before tax) amounts.

Annual Personal Income

Children under 15 years are not included in this analysis. When annual income is arranged in order from lowest to highest, the top 20 percent had incomes that were greater than $43,800, while the bottom 20 percent had incomes of less than $8,000. Other key findings include:

  • 53 percent of people in the 15-24 year age group had an annual income of less than $8,000;
  • 52 percent of people aged 65 and over had an annual income of between $8,000 and $15,800;
  • 73 percent of those who reported they were not employed and not seeking work at the interview date had incomes of less than $15,800;
  • 58 percent of those who were employed at the interview date had incomes greater than $27,500;
  • of those who were not employed but seeking work, 39 percent had an income of less than $8,000; and
  • 55 percent of those with no qualifications had an annual personal income of less than $15,800.

Annual Family Income

People who do not live with members of their immediate family, that is, who live alone or with unrelated individuals, are not included in this analysis. Individuals have been classified according to the total income of all family members they live with. Family incomes have not been adjusted for family size. The main findings include:

  • when annual family income is arranged in order from lowest to highest, the top 20 percent had incomes greater than $90,100, while the bottom 20 percent had incomes of less than $26,100;
  • 75 percent of those whose family type is "couple with children" had family incomes greater than $43,500;
  • 56 percent of children in sole parent families had a family income of less than $26,100;
  • overall, 71 percent of those aged 65 and over had annual family incomes of less than $43,500;
  • 67 percent of NZ Europeans had an annual family income of more than $43,500; and
  • just over half of those who gave their ethnicity as Maori or Pacific peoples had an annual family income of less than $43,500 (51 percent and 56 percent, respectively).

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