Relative living standards and needs of low-paid employees

Definition and measurement

• Jocelyn Pech
• Fair Work Australia

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03 June 2011This paper describes and contrasts approaches that are typically employed to define and assess living standards and needs.

The paper notes that because many aspects of living standards cannot be directly observed, research typically relies on one or more indicators of living standards. The most common of these in Australian research is income, and the paper explores key income benchmarks: the Henderson poverty lines; relative poverty lines based on estimates of median or mean equivalised household disposable income; and indicative budget standards developed by the Budget Standards Unit of the Social Policy Research Centre in the 1990s. It notes that recent research has also focused on expenditure, assets or wealth, financial stress and/or material deprivation. When these indicators are combined, researchers have found that a far smaller proportion of households are considered to be “poor” or have “low living standards” than are found to be “poor” based on cash income alone.

The paper discusses definitional and methodological issues that need to be considered by researchers seeking to analyse the circumstances of low-paid employees such as reference points for living standards relativities. Its primary purpose is to assist with future research.