Work no longer enough to prevent poverty

In-work poverty is now a bigger challenge than out-of-work poverty, new research finds today. 58% of children living in relative poverty have at least one parent in work.

In-work poverty is now a bigger challenge than out-of-work poverty, new research by the Joseph Rowntree Foundation finds today.

Its latest annual report analysing poverty and social exclusion shows that 58% of children living in relative poverty have at least one parent in work. This reflects a long-term trend: in-work poverty has been steadily rising for several decades to affect over 2 million children today, while out-of-work poverty has been falling steadily since the early 1990s so it affects fewer than 1.5 million children today.

Part of this trend appears to be driven by people swapping out-of-work poverty for in-work poverty. In particular, the lone parent employment rate has risen by more than 10 percentage points over the last 15 years. But much of this increase has been in low paid work that does not often offer much chance of progression.

All of this points to the fact that, while work remains the best route out of poverty, it is not enough on its own. A strategy to cut (relative) poverty in general, and child poverty in particular, needs to focus on increasing in-work earnings as well as finding work.

Over the last decade, tax credits have “taken the strain”. The JRF report finds that tax credits are today keeping one million families out of poverty. In this context, the Coalition Government’s plans to cut tax credits (including reducing the Childcare Tax Credit to 70% of eligible costs from 80% today, cuts and caps to Housing Benefit (given HB is also an in-work benefit) are likely to lead to increases in relative poverty. At the same time, this group faces a double hit from declining real incomes, as the Resolution Foundation has shown.

But equally clear is that increasing tax credits more quickly than earnings is not possible each and every year and doesn’t provide a full policy response – there are limits to how far increasing wage subsidies can ‘hold back the tide’. So, while further increases in tax credits would be part of a strategy for cutting in-work poverty, they are not the whole of the answer.

Equally important are the integration of the skills and employment systems – still too disparate today – to help people ‘get on’ at work as well as ‘get in’ to work. Not to be forgotten too is the role of employers, both in creating opportunities and in paying a living wage. On the latter, the public sector can take a lead, both directly and through their supply chains. None of this is easy, particularly in the current economic climate, and employers need to see the business case for acting – this needs to be part of an economic growth strategy, rather than solely based on corporate social responsibility – supported by Government.

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35 Responses to “Work no longer enough to prevent poverty”

  1. Hazico_Jo

    RT @leftfootfwd: Work no longer enough to prevent poverty http://bit.ly/eO5SC9

  2. Bored London Gurl

    RT @leftfootfwd Work no longer enough to prevent poverty http://bit.ly/eO5SC9

  3. Crimson Crip

    RT @leftfootfwd: Work no longer enough to prevent poverty http://bit.ly/eO5SC9

  4. Duncan Weldon

    RT @leftfootfwd: Work no longer enough to prevent poverty http://bit.ly/eO5SC9

  5. Michelle Swallow

    Excellent article about in work poverty RT @leftfootfwd: Work no longer enough to prevent poverty http://bit.ly/eO5SC9

  6. NewLeftProject

    RT @leftfootfwd: Work no longer enough to prevent poverty http://bit.ly/eO5SC9

  7. Cheryl Baker

    RT @leftfootfwd: Work no longer enough to prevent poverty http://bit.ly/eO5SC9

  8. Bethany Lane

    RT @leftfootfwd: Work no longer enough to prevent poverty http://bit.ly/eO5SC9

  9. Anthony Bouch

    RT @leftfootfwd: Work no longer enough to prevent poverty http://bit.ly/eO5SC9

  10. JRF

    RT @leftfootfwd: Work no longer enough to prevent poverty http://bit.ly/eO5SC9

  11. Philip Painter

    Wage slavery or the dole – which is worse? http://bit.ly/ee55OL

  12. Trail of Hope

    Work no longer enough to prevent poverty: In-work poverty is now a bigger challenge than out-of-work poverty, ne… http://bit.ly/fSke5M

  13. NowGetReal

    RT @f8vnz: Wage slavery or the dole – which is worse? http://bit.ly/ee55OL

  14. Harry Leslie Smith

    RT @leftfootfwd: Work no longer enough to prevent poverty http://bit.ly/fEP49D

  15. The Free Market

    #CFP #SKP Work no longer enough to prevent poverty http://bit.ly/e0X7N7

  16. NH Community Trust

    RT @cureforpoverty: #CFP #SKP Work no longer enough to prevent poverty http://bit.ly/e0X7N7

  17. Deborah Segalini

    When was work ever enough to prevent poverty? If it had been, the Labour government wouldn’t have needed to introduce tax credits, surely.

  18. Sue Bristow

    RT @leftfootfwd: Work no longer enough to prevent poverty http://bit.ly/fEP49D

  19. Mikael Branting

    RT @leftfootfwd: Work no longer enough to prevent poverty http://bit.ly/eO5SC9

  20. TU Cultural Studies

    Work no longer enough to prevent poverty http://bit.ly/fSLvd2

  21. Frieda McAlear

    RT @leftfootfwd: Work no longer enough to prevent poverty http://bit.ly/eO5SC9

  22. thomas murphy

    RT @1923Memoir: RT @leftfootfwd: Work no longer enough to prevent poverty http://bit.ly/fEP49D

  23. Nicholas Ripley

    Work no longer enough to prevent poverty /by @stephenaevans http://bit.ly/f5pmTV /cc @feedly

  24. Charles

    RT @leftfootfwd: Work no longer enough to prevent poverty http://bit.ly/eO5SC9

  25. Onus Probandy

    Given two numbers, A and B, which both grow by some percentage x% it is guaranteed the difference between them will grow by x% as well.

    OLD_INEQUALITY = B – A
    NEW_INEQUALITY = B * (1+x) – A * (1+x)
    = (B – A) * (1+x)
    = OLD_INEQUALITY * (1+x)

    NEW_INEQUALITY is by definition OLD_INEQUALITY increased by x%.

    Therefore if the country experiences growth of 10%, we would expect the “relative inequality” defined in this way to grow by 10%.

    The mistake is to define inequality as an absolute. It is logically unsound to compare a relative growth with an absolute number. The equation should actually be to find how many times bigger B is than A:

    OLD_INEQUALITY = B / A
    NEW_INEQUALITY = (B * (1+x)) / (A * (1+x))
    = B/A * (1+x)/(1+x)
    = B/A * 1
    = OLD_INEQUALITY

    Relative poverty is an appalling measure of poverty. If my neighbour wins the lottery, I am not instantly poorer, nor does my family start to starve.

    Conversely, reducing relative poverty in no way guarantees that absolute poverty is reduced. If my neighbour and I are both poor, and yet he owns 100 times more than I do — we can reduce relative poverty by taking what he has off him and dividing it amongst all. Neither of us would be any less hungry.

  26. Mr. Sensible

    This is why the Coalition should not be going cutting some of these in work benefits.

  27. vikz Richards

    Work no longer enough to prevent poverty | Left Foot Forward http://ow.ly/3leXe

  28. vikz

    Work no longer enough to prevent poverty | Left Foot Forward http://ow.ly/3leXU

  29. Chris

    @Onus Probandy

    I think your argument and calculations are simplistic. You’re assuming that A and B both grow at the same percentage rate, x, but income growth last year for the average worker was stagnant but grew by 55% for corporate fat cats. If the country experiences 10% growth doesn’t correlate into 10% growth in pay for everyone.

    “Relative poverty is an appalling measure of poverty. If my neighbour wins the lottery, I am not instantly poorer, nor does my family start to starve.”

    Ermmm, yes you are instantly poorer relative to your neighbour. That is why your neighbour moves out and buys a mansion while you stay in the poky terrace. You’re misunderstanding what the purpose and meaning of relative poverty, basically it is a pseudonym for income inequality.

  30. Onus Probandy

    @Chris

    I think the calculations are simplistic too. I don’t think they are wrong though. Which is why I am surprised to constantly hear about relative poverty.

    I was not arguing that “corporate fat cats” didn’t get bigger increases than the “average worker”; I was arguing that relative measures of poverty are not valid by using an example where both the poor and the rich experience the same growth but the “relative poverty” always shows that the rich person got more benefit from that — they did not.

    With your example, the absolute measure of poverty that I proposed would have shown exactly what you want it to, since A’s growth is zero:

    OLD_INEQUALITY = B / A
    NEW_INEQUALITY = (B * (1+0.55)) / A
    = OLD_INEQUALITY * 1.55

    i.e. 55% increase in inequality.

    “Ermmm, yes you are instantly poorer relative to your neighbour.”

    What does that matter? That is exactly my argument. Judging my own poverty by anything other than an absolute measure is ridiculous. What if my neighbour wins the lottery but I don’t know about it? What if my neighbour wins the lottery and just banks the lot and never spends any of it? Am I still relatively poorer then?

    My ability to provide for my family is a function of my own circumstances, not my neighbour’s. When he wins the lottery I will have no more or less than I had before he won it.

  31. Chris

    @Onus

    “…I was arguing that relative measures of poverty are not valid by using an example where both the poor and the rich experience the same growth but the “relative poverty” always shows that the rich person got more benefit from that — they did not.”

    They do, an x% growth in the rich persons salary is worth more in purchasing power terms than an x% growth in the poor persons salary.

    “What does that matter? That is exactly my argument.”

    It does matter.

    “My ability to provide for my family is a function of my own circumstances, not my neighbour’s.”

    This is your argument, all the simplistic calculations and neighbour’s winning the lotto are superfluous. You’re smart enough to know the arguments for relative poverty but you’re political outlook means you are happy to disregard them.

  32. Bryonny G-H

    RT @leftfootfwd: Work no longer enough to prevent poverty http://bit.ly/fEP49D

  33. Onus Probandy

    @Chris

    “This is your argument, all the simplistic calculations and neighbour’s winning the lotto are superfluous. You’re smart enough to know the arguments for relative poverty but you’re political outlook means you are happy to disregard them.”

    You didn’t actually refute that argument, you simply declared my example “superfluous”. I would therefore reason that your political outlook has coloured your opinion as much as mine colours mine.

    It is for that reason I wanted to bring this down to simple mathematics.

    I have no difficulty in accepting that society creates people with different resources, and that making all people richer is a good thing. What I have a problem with is defining a measure which does not actually indicate poverty. You have chosen to focus on my first example of the lotto, ignoring my second where two people in poverty have significantly different relative poverty. Therefore if society designs policies to reduce this meaningless measure we have not guaranteed a reduction in poverty, merely in the meaningless measure. It is optimising the wrong quantity.

    As to your point about purchasing power. Again I say: “so what?” Let me give another of my “simplistic” examples.

    Three people, A, B, and C. A and B each earn half of what C earns (let’s say 50, 50, 100). All get pay rises of 50%. A, B and C now earn (75, 75 and 150). Relative poverty measures tell us that A and B are now poorer than they were, being that they used to earn 50 less than C, and now earn 75 less than C. However, A + B still equals C. Therefore the purchasing power of the group “A & B” still equals the purchasing power of the group “C”. Not to mention the fact that A and B are actually richer than they were.

    If we measure in absolute terms (and compensate for inflation), then the poorest 10% of today are richer than the richest 10% from 1960. Yet “relative poverty” will tell us that they are worse off. I cannot subscribe to a measure that tells us that. Since by extension, it will tell us that fewer people were in poverty in 1850 and it will tell us that starving Africans are not in poverty because at least everyone in the village is at the same level of starving.

  34. Internet Horizons

    RT @leftfootfwd: Work no longer enough to prevent poverty http://bit.ly/fEP49D . Can #Software #Education raise earnings?

  35. Fizz

    Taking the example above of AB & C and their 50% pay rise. I am not sure, due to the tendancy to see everything as a percentage, that they wouldn’t be seen as in the same degree of relative poverty as A & B still earn 50% of what C does.

    But this is damnable. The reason that they all got the 50% pay rise was that the RPI (or was it the CPI?) went up by 50%. A and C live (obviously at opposite ends) of the same town. They take the same train to work and shop in the same supermarket. As everything has gone up, on average by 50%,
    the 50% rise was fair, no?

    Well, no! B’s train fare has gone up not relatively, but absolutely, by precisely the same amount as A’s (they both travel second class), his fish fingers have risen in price by the same amount as A’s, so why does A need twice as much increase (in absolute terms) as B to cope with the same increases in the cost of living? Especially as A has considerably more money in the first place?

    I think that the concept of “relative poverty” is very unhelpful when it gets in the way of seeing that some people are being left trying to manage on incomes which are inadequate for reasonable needs.

    The trouble is it is almost impossible to work out a living wage. I earn just under the average wage: the crucial factor for me in whether I am relatively poor or relatively affluent is the date I bought my house. As it was some years ago, I now have scarcely any housing costs and am relatively affluent. If I had bought the same house yesterday, at what it would currently cost, I would be spending half (or more) of my income on the mortgage and be relatively impoverished.

    Long ago I was a benefit claimant and I can remember how I used to perplex myself over questions like whether a fridge was a necessity or a luxury. (In my centrally heated housing-association flat milk took less than a day to turn: I had no stone-floored back pantry as I might have had in a slum, and it would have been very much more expensive NOT to have had a fridge.) This is the issue with a lot of apparent luxuries: they actually SAVE you money: life is more EXPENSIVE without them.

    And I worked out the difference between a poor person and an impoverished one then. A poor person uses a push-bike, because they can’t afford bus-fares. An impoverished person has to pay bus-fares, because they can’t afford a push-bike.

    Poverty is caused by lack of money, but it becomes self-perpetuating because poverty is actually expensive. Impoverished people can’t take advantage of sales: instead they buy top price goods from catalogues because they have no money at all and with a catalogue you can pay later, they borrow at insane interest rates because they are desperate and without alternatives. They get ill because they have poor diets, un-sensible clothes and cold or over-heated houses (often damp), which makes it harder for then to get and keep a job.

    Whilst some of them might be helped by a lecture in managing their money, most would be more helped by having enough money to manage.

    Final point: When I was on the dole I bought my son a computer. (It was a second-hand ZX81, but hey, back then that was a status symbol). I forget how many people passed comments that I must be getting generous handouts if I could afford to buy such luxuries. And maybe the dole in the Thatcher years was better than it is now. (They certainly didn’t try to force you to seek work when your child was five! Whilst there might be a case for getting a single parent of a child that age to start considering serious vocational training – the sort that takes years and leads to a professional job, one gets the impression that the single parents are to be shoved into minimum wage jobs which will lead on to a lifetime of dependency on Working Tax Credit.)

    Anyway what do you think my son is now? An unemployed layabout? Or an IT worker earning a respectable salary?
    Yes. It’s one more example of an “extravagance” earning its keep a thousand times over.

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