Everybody’s earning 10k
Ah, income data season, my favourite time of the year.
The latest Key Household Income Trends 2022 (main report and statistical tables) showed that the median family in Singapore is now making S$10,000 a month. The average family is now making S$13,000.
These are pretty impressive numbers. But as with all impressive numbers from the government, they can be padded up with a generous, wagyu-level dollop of fat.
First, we are talking about household income, not individual income. The average number of employed persons at these households is two, even while the average household size is three to four (or 3.3 to be exact).
This means that we are talking about two breadwinners per household, typically the husband and wife if you want to be heteronormative, supporting a child and possibly a parent or another child. Two breadwinners is remarkably consistent across all income levels.
Covid did little to change this. There were grumblings from some quarters about this S$10,000 statistic, as people wondered if children were moving back in with their parents. The data actually shows that overall household sizes continue to shrink ever so slightly in 2022, resuming the broad trend of the last decade.
Interestingly, household sizes and employed persons per household declined the most in the 2nd to 6th deciles, arguably the lower middle to middle class. Among the richest households, household sizes and employed persons actually increased in 2022.
Household sizes in the the top two deciles by income also seem to be declining less quickly than in the lower deciles in the past year, though they were smaller to begin with. Figuring out what is going on is more complicated than you think¹.
Either way, there is still an average of two employed persons per household. Already, that S$10,000 figure shrinks to just S$5,000 per person.
Also, and this is a gripe I had since more than 10 years ago when the government first started using this statistic, the data includes employer CPF contributions². These contributions amount to 17% of one’s salary, for those aged 55 and below.
Strip that out, and you are talking about just a median salary of S$4,300 per employed person.
This is hardly a picture of riches, but in line with individual salary statistics. It isn’t low either, but probably barely enough, if you need to support a kid with tuition and overseas trips, while giving an allowance to two sets of parents or grandparents.
Finally, I like looking at household income data by deciles. It’s kind of like window shopping.
Household incomes at the 10th decile have stayed remarkably constant at S$30,000 in the last 10 years.
This suggests that in that broad group, salaries hit a ceiling at S$15,000 a month per person for dual-income households, or S$30,000 a month for single-income households with spouses shopping at property launches all day.
I guess you can’t spend much more than S$30,000 a month. New life goal!
Speaking of incomes, I’ll be remiss if I didn’t mention that there will be a ministerial salary review this year.
Interestingly, that S$30,000 a month average for the top decile is still lower than the pay of the lowest office holder in the government, the humble parliamentary secretary (not to be confused with permanent secretary, a more exalted role). Their salaries work out to S$34,833 a month.
The best time to be a minister from the ruling party was probably in the 1990s and 2000s. To know more, read the white paper here in the aftermath of the 2011 elections.
Poor office holders and their current 40% discount from the median income of the top 1,000 Singaporeans. Their pay has stagnated along with the rest of the poor 10th decile people in the last 10 years.
Will their pay finally go up like the rest of us?³
Footnotes:
¹ One theory is that the richer you are, the fewer kids you have. But as the footnotes to the statistical tables point out, households do move between deciles. Children grow up and form their own households. Thus changing demographic structures might play a role, but this issue is too complex for me to think about right now.
² Adding employer CPF contributions to one’s income just further obscures what the real disposable income available to a person or household really is. Your CPF is essentially locked up for a long time until you buy a house or retire, so effectively you do not see the money and might be dead before you use it. Going by the median household income example, S$5,000 a month per person (aged 55 and below) including employer CPF translates to S$4,300 a person excluding employer CPF and S$3,440 a person excluding employee CPF contributions.
³ Of course, even broke and highly sarcastic celerymen might understand that those in power cannot be paid too little, because the temptations of corruption will otherwise be too great. There is nothing to stop a powerful private company paying a million or two to a government official in a secret offshore account in order to gain access to tax breaks or coveted projects that can potentially reward said company to the tune of tens, hundreds of millions or billions. Indeed, those being paid a million dollars a year will not be immune to the temptations. But perhaps it does help.
The argument that high salaries mitigate corruption doesn’t get made, or made clearly enough, even in the original 1994 white paper found here. Rather, Singaporeans only hear about how we should benchmark civil service and ministerial salaries to the private sector, because we want to compensate top talent suitably, to ensure their financial sacrifice in entering the public sector isn’t too great.
However, GDP and income growth isn’t what it used to be. Singapore faces intense competition against other countries whose citizens are equally smart, if not smarter, but are willing to be paid a fraction of what Singaporeans are paid.
At the same time, some of the skills needed to be a top-tier private sector earner, such as coding skills, stock trading skills, or entrepeneurial skills, might not be applicable to the public sector. Are you really saying people who can be Jim Simons or Elon Musk are suitable for the Singapore Administrative Service or has the political nous to form a Cabinet? And are you really saying such people will say, if offered the opportunity, “No thanks, I don’t want to serve the country, because I need to make a million dollars a year?”
Meanwhile, as a society, we might rather someone become a top surgeon in the private sector, making millions a year, and continue to treat rich sick people successfully, and poor sick people occasionally, than become a minister and have to reply to the Opposition’s questions on their high salaries every other day.
When property prices rise too fast, education and healthcare gets too expensive, and young people feel too stressed to get married and form families, you have a problem. When the world no longer sees a purpose in doing business in Singapore or paying Singaporeans globally superior salaries, you have a problem.
At these times, as people suffer, they will question whether their leaders can really be called top talent, who deserve to be paid much more than even the average incomes of the top 10 per cent of the local population.