Friday, November 18, 2011

Joining the top 1%

Yesterday's news that MPs were getting a $7,000 pay rise, most of it as "compensation" for no longer being allowed to rip us off on travel, got me thinking. Where do MPs sit on the income distribution, and how has that changed over the years? It looks to be a very interesting story, but its conclusion is hampered by a lack of accessible data.


Above is a graph showing a backbench MP's salary (taken from their annual salary determinations as shown on and Knowledge Basket) and the average incomes of two income groups in NZ: the 90th - 95th and 95th - 99th percentiles, as taken from the World Top Incomes Database. Unfortunately, the data series for the latter ends in 2002. But the story it tells is clear: while being firmly in the second 5% of our society back in the 80's (something I think will be confirmed if I go offline and start looking at physical records), MPs' pay rises have pushed them higher, into the top 5%. And now, they seem to be well on their way to joining the top 1% of our society.

(If anyone wants to do that physical search for me, and go back through NZ Yearbooks getting the ordinary backbench MP's salary between 1980 and 1988 (July years), I'd be most grateful. Also, if anyone has more recent average income data for those percentiles, but that's less likely).

This is one of the reasons for the increasing alienation of ordinary kiwis from politics: our MPs have elevated themselves above us. We need to talk about whether we want this to happen, whether we really want our MPs to be part of the top 1%, part of the problem rather than a possible solution.