Minimum wage deliberations are about to start. The submissions are in and the Fair Work Commission is soon to undertake its annual wage review. It determines a minimum wage for almost two million Australian workers, with wage ramifications for millions more.

The standard issues will come up, about the trade-off between affordability by employers (hence impacts on employment levels) and the costs of living for workers (hence impacts on poverty levels).

The hope, as the Fair Work Commission's name suggest, is for a fair outcome. But we also refer to the commission as the "independent umpire". Umpires only interpret rules; they don't make them.

But annual wage reviews are missing a number of important developments that impact on both employment and living standards, and these are not adequately covered in the rules.

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One is the rise of the gig economy, where people are self-employed and so outside of the remit of minimum wage legislation. Another is the loading for casual work, which is somehow seen as separate from deliberations on a minimum wage.

What both these issues reflect is that employment and work generally is increasingly of uncertain durations and weekly payments are risky.

It's not just the hourly rate that matters, but how many hours work you can get in a week or a year, how regular your income is and what other expenses are required to undertake work (such as income protection and public liability insurance, superannuation and so on).

Homes run like businesses

Volatile weekly income is a real problem for managing the family budget. It makes running the home like running a business.

Ask any small business about the problems of unpredictable cash flow and they will tell you how difficult and costly it is. It invariably involves stress of whether the bills can be paid on time, and if not which ones to go into arrears on.

Same for households. Research shows that people who are on a volatile income have a lower standard of living than people who have a regular fortnightly payment of the same annual income.

US Financial Diaries closely studies households and their balance sheets. They asked people whether "financial stability" or "moving up the income ladder" was more important: 77 per cent of people chose "financial stability".

In Australia, we see in survey after survey addressing household financial viability where people say that the costs of living are their greatest concern. But CPI data show that the costs of goods and services are pretty stable. It's easy to say that people aren't rational, but that would be to ignore the costs of risk.

Financial calculation dominates so many facets of life, and those calculations systematically work against ordinary workers and their families. ( Supplied: John Richards )

Risky income can be costly

Unpredictable, risky income imposes real costs on households that never appear in the CPI.

Households are simply expected to absorb these costs because there is, it seems, no other choice. That's just how the labour market has evolved.

But for corporations and the finance industry, this logic plays out very differently. In these domains, there is an axiomatic trade-off between risk and return. To take on higher risk, a higher return is expected. If there is no trade off, there is no reason to take on higher risk.

So why is this trade-off axiomatic for investors but ignored for households? The answer, essentially, is that investing is voluntary: it requires the seduction of good returns to make an investor hand over their money. Nothing greedy here; just sensible business.

But working isn't really voluntary. People need an income to subsist, so they cop the growing risk and all the insecurity that comes with it, whether they like it or not, and without any additional compensation.

It isn't fair. But these are the rules the umpire currently enforces.

Minimum wage should reflect risk

It's time to challenge the interpretation of the rules. We are living in a world in which financial calculation dominates so many facets of life, and those calculations systematically work against ordinary workers and their families.

Financial risk should be factored into the minimum wage. ( Flickr: Pam Loves Pie )

If we want to follow through the full implication of this development, we shouldn't just be looking at the CPI as a measure of change in the costs of living and factoring that in as a central determinant of increases in the minimum wage.

If we want households to run as if they are businesses, we should also be pricing the risks to households of precarious and volatile income, like we do for investors.

And the costs of carrying these risks should be reflected in minimum wages. It is just sensible business.

Dick Bryan is Emeritus Professor of Political Economy at the University of Sydney and co-author of Risking Together: How Finance is Dominating Everyday Life in Australia.