Employment may be growing stronger than it has for a number of years but people feel neither confidence in the economy nor joy at the news about employment growth. It’s hardly a surprise: wages and household income are growing at levels that would normally be associated with a recession.

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Coming off the back of the record low growth in the wages price index, the latest figures for average weekly earnings show that for male workers total earnings in the 12 months to May rose just 0.5% – easily the lowest on record, reflecting the lack of income growth in the economy at the moment.

Average weekly earnings – unlike the wages price index – are not weighted. Thus, if there is a shift from high-paying jobs – such as those in the mining industry – to lower paid work, then the average will fall (or rise slower) even if wages are rising.

In the past year, while employment has grown, a sizable shift from high-paying jobs to lower paying ones has occurred:

Of the 10 industries which saw an increase in employment, only four pay above-average wages:

Take, for example, the shift of workers out of the mining industry into construction. Male full-time workers in the mining industry earn on average $2,601 a week, but the industry lost 33,300 workers over the past 12 months.

The construction industry added 23,500 workers, as the housing construction market heats up. But construction pays less than the mining industry – just $1,529 a week – below the average male full-time wage of $1,591.

Thus the rise in the average earnings of full-time workers is dampened due not just to slow wage growth in each industry, but because of the greater numbers of people shifting to lower paying jobs.

Overall, average full-time earnings grew by just 2.01% in trend terms – the lowest annual growth since the 1990s recession:

The greater rise in full-time earnings than total earnings reflects that in the past year, part-time employment has grown faster than full-time work.

The pathetic growth is even more striking when you consider that the last time full-time average earnings grew by such a low amount, the unemployment rate was 10.8%.

Our wages and income growth is akin to that experienced during recessions. Yet while our GDP growth is certainly not strong, no one is suggesting the economy is shrinking, and employment growth over the past 12 months is stronger than any time since 2012.

Christopher Kent, the assistant governor of the Reserve Bank of Australia, last week addressed this issue in a speech to the Queensland branch of the Economic Society of Australia.

He noted the unemployment rate was expected to remain largely flat (ignoring month-to-month variability) and that “employment growth” was running faster than “the growth in the working-age population”.

The RBA has been wrestling with why this is occurring, given the economy is growing at a speed that would normally suggest the unemployment rate should rise.

Kent firstly noted that the population growth has been a bit below what was previously expected – mostly owing to a decline in migrants seeking work here. He also noted that wage growth has been lower than normal and that there has been a growth of jobs in more labour-intensive industries.

Mining, for example, may be well-paying but it is not especially labour intensive, unlike jobs in the services sector – such as accommodation and food services, art and recreation services, healthcare and social assistance – which experienced strong employment growth over the last 12 months.

Thus we have a situation where GDP growth is low, so there isn’t much demand in the economy which would drive higher wages. Employment growth is taking place in areas that are more labour intensive, but also lower paying.

Combined, this means low wage and low economic growth but also stronger – or at least, better than expected – employment growth.

What it does not equal is strong growth of national income.

In the past year and a half, with the massive drop in export prices, Australia’s national income per person has fallen. Thus, while the economy itself has been growing, we have not on average been getting any richer.

Mostly this is reflected through falling export prices which flows through to larger profits. But the impact on workers’ income is pronounced as well:

While the correlation between national income growth and average earnings is not precise, since the decline in national income per capita in 2013 there has also been a sharp drop in the growth of average earnings.

So it’s not surprising people don’t believe the relatively good news about employment growth.

Essentially, people are able to get work more easily than in the past few years but it’s not as well paid. When you’re in such a situation, it’s pretty easy to roll your eyes at positive news on the employment front.

The good news – of a sort – is that the lower wages growth, coupled with our falling exchange rate, has allowed us to become much more competitive compared with overseas nations.

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Our real exchange rate has fallen 15% in value the past two years:

In time this improved competitiveness will hopefully lead to increased exports and income from those exports. This in turn leads to greater employment in those sectors and hopefully stronger income and wages growth. Sure, that’s cold comfort for many.

Right now wages and incomes are growing as though we are in a recession. The only positive is that, partly because of that weak income and wages growth, at least unemployment is not rising as it would if we were really in one.