How land prices outgrew workers' incomes: the macro view

Gavin R. Putland does a simple division.

The Bureau of Statistics publishes an annual set of tables under the title Australian System of National Accounts (ABS 5204.0). Table 61 has a column showing the total value of residential land in Australia (“Residential - Australia”, series ID A2423270K). Table 6 has a column showing the total “compensation of employees” (series ID A2421040T), including employers' contributions to insurance and superannuation. If we divide the first column by the second and graph the result, here's what we get.

Since 1996, employers' contributions to insurance and super have slightly increased relative to wages and salaries. Hence, by including those contributions, we overestimate the growth in workers' spending power. Nevertheless, the total price of residential land has outgrown the estimated total spending power of workers by more than 2 to 1.

If my arithmetic serves me correctly, “2 into 1 won't go.”