Working Draft — LGIT framework unpublished. Shared for feedback only. Please do not cite or distribute without permission.
The Legitimacy Gap
Australia 2018–2023
The economy recovered. Why didn't people feel better?
An LGIT analysis of HILDA longitudinal data.
Five Things the Data Doesn't Tell You
HILDA publishes excellent longitudinal data. But numbers alone don't answer the questions that matter. Here's what LGIT analysis reveals.
Is this getting better or worse?
ESCALATORY TRAJECTORY: Multiple signals indicate grievance is worsening despite economic recovery.
Did jobs fix the problem?
Labour market and wellbeing are tracking together.
Who's bearing the burden?
The aggregate masks concentration. Young people and unemployed carry disproportionate distress — this isn't random, it's structural.
What's the cost of "back to normal"?
Workers forced back to office have 53.4% time stress vs 38.9% for those who kept WFH. Taking away what people had costs more than never giving it.
Why doesn't recovery feel like recovery?
Housing stress surged 43% (7.4% → 10.6%). This is the translation failure — wage gains get absorbed by housing costs before people feel them. It's why the legitimacy gap keeps widening despite "recovery."
Data source: HILDA Statistical Reports 2022–2025 (Melbourne Institute). Analysis: LGIT diagnostic framework applied by IRSA Institute.
Distress Climbed and Stayed There
The evidence for an elevated plateau
Psychological distress surged during the pandemic and didn't come back down. The share of Australians in very high distress rose from 4.7% in 2018 to 7.5% in 2022. By 2023 it was still at 7.1% — two years after the acute phase.
This isn't a temporary blip. When distress stays elevated after the supposed cause is gone, that's a signal of something structural — not just a pandemic hangover.
Distress changed by +51% from 2018 to 2023. That's 0.6 percentage points per year.
Very High Distress (K10 ≥ 30)
Source: HILDA Statistical Reports 2022–2025. K10 ≥ 30 indicates likely need for professional intervention.
Jobs Came Back. Wellbeing Didn't.
Why employment recovery isn't enough
Two lines that should move together — but don't
Job loss probability fell below pre-COVID baseline by 2022, but distress continued rising.
Job loss fear spiked to 13.6% in 2020, then fell back below pre-COVID levels by 2022. But distress kept climbing. That's the puzzle — the thing that was supposed to cause the problem went away, but the problem stayed.
Both indicators are moving in the same direction.
Real Wages Tell the Story
Labour market recovery ≠ legitimacy recovery. Having a job is necessary but insufficient. When wages decline in real terms during a "recovered" economy, the message received is: you're working more for less.
Housing Ate the Recovery
The fastest-moving grievance indicator
While wages stagnated and distress climbed, housing costs accelerated. The share of low-income Australians spending more than 30% of their income on housing jumped from 7.4% in 2021 to 10.6% in 2023 — a 43% increase in just two years.
This is the fastest-moving grievance indicator in the entire dataset. When housing becomes unaffordable, every other pressure intensifies — and there's nowhere to retreat to.
+43% in 2 years. That's 1.6 percentage points per year. This is why the legitimacy gap keeps widening despite official "recovery."
Housing Stress (30/40 Rule)
30/40 Rule: Housing costs exceed 30% of income for households in the bottom 40% of income. This is the standard measure of housing affordability stress.
Housing stress isn't a grievance indicator — it's a legitimacy erosion mechanism. It explains why economic recovery doesn't close the legitimacy gap. When housing costs absorb wage gains before people feel them, the official narrative ("things are improving") diverges from lived experience ("I'm not better off"). That gap is where trust erodes.
Taking Away WFH Made Things Worse
The cost of 'back to normal'
COVID forced everyone to work from home. Most people kept some flexibility afterward, but about a third were forced back to pre-COVID arrangements. Those people are measurably worse off.
That's the cost of taking something away. Once people experienced flexibility, losing it hurt more than never having it. You can't just "go back to normal" when normal was worse than what people got used to.
Time Stress by WFH Trajectory (2023)
Some Groups Carry Most of the Burden
Why averages hide the real story
When you look at the average, Australia's distress doesn't seem catastrophic. But averages hide concentration. Young people and unemployed people carry most of the load.
18-24 year olds have 5.4 times the distress rate of 65+. That's not a life-stage thing — it's a structural burden falling on people who can't yet vote it away.
Age Gradient
Youth at 2.2x the average
Employment Status
Unemployed at 3.3x employed
Chronic Poverty
Women 48% more likely (7+ years)
Grievance is structurally concentrated. Policy responses that improve aggregate statistics may leave the most affected populations behind. This creates legitimacy stratification, grievance inheritance, and institutional distance asymmetry—where those most affected are furthest from institutional response.
The Legitimacy Trajectory
The gap between institutional recovery and experienced reality is the legitimacy gap. It does not close automatically.
| Signal | 2018 | 2019 | 2020 | 2021 | 2022 | 2023 | Status |
|---|---|---|---|---|---|---|---|
| Very High Distress | 4.7% | 5.1% | 5.8% | 6.2% | 7.5% | 7.1% | ELEVATED |
| Job Loss Risk | — | 9.1% | 13.6% | 10.2% | 8.3% | ~7% | RECOVERED |
| Real Wages | — | +0.6% | +0.8% | +1.7% | -1.1% | -2.4% | DECLINING |
| Housing Stress | — | — | — | 7.4% | 9.6% | 10.6% | RISING |
| Youth Distress | — | — | — | 14.8% | 16.4% | 15.8% | CRISIS |
Implications
This analysis has implications for policy, institutions, and LGIT theory.
For Policy
- • Employment targets insufficient—need wage & security targets
- • Youth mental health is structural, not clinical
- • WFH policies have measurable wellbeing consequences
- • Chronic poverty (10yr) beats point-in-time measures
For Institutions
- • "Return to normal" generates grievance when normal was worse
- • Benefits experienced become expectations
- • Revocation creates institutional distance
- • Young people's perception shapes long-term cohesion
For LGIT Theory
- • Grievance persistence: shocks don't auto-resolve
- • Decoupling: material ≠ psychological recovery
- • Reversion penalty: removal costs > original gain
- • Structural loading: specific populations bear aggregate
Data Transparency
All data derived from publicly available HILDA Statistical Reports 2022–2025. No microdata access required. CC-BY compatible with attribution to Melbourne Institute.