Wages aren’t the only factor for British working poor

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Sixty percent of the people living in poverty in the UK live in a household where someone is working, the highest figure ever recorded, a new report shows.

The research shows that the risk of poverty for adults living in working households rose by more than a quarter (26.5 percent), from 12.4 percent to 15.7 percent, in 10 years—from 2004-05 to 2014-15.

The findings suggest that it is the number of workers in a household—and not low pay—that determines in-work poverty.

“There has been a lot of discussion recently about how increasing the minimum wage can help to reduce poverty,” says Rod Hick of Cardiff University. “However, what our report finds is that less than half of adults experiencing in-work poverty have a low paid worker in their household, and most low paid workers live in non-poor households.

“Low pay is one of the reasons why in-work poverty occurs, but it’s not the only reason, and indeed, it is a secondary factor behind the amount of work conducted by household members.

“Tackling in-work poverty requires re-thinking our approach: it’s about improving the circumstances of the whole household, not just those of an individual worker, and promoting employment is key.”

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The study shows that in the past decade tax credits for low-income working families have proven to be an important means of support.

“Our research shows that tax credits have proven quite highly effective in reducing in-work poverty—for families who received them,” Hick says. “However, tax credits are received by less than half of working poor households, through a combination of design and low take-up. In particular, working poor families without children have very low rates of tax credit receipt.”

Further, the rise in in-work poverty has been concentrated among families who live in private rentals and those who live in social housing.

“Our research finds that housing costs are becoming an increasingly important factor in determining poverty rates amongst working families. If policy does not do more to tackle rising housing costs directly, then it seems likely that these will eat up gains made elsewhere—for  example, in terms of the planned increases in the minimum wage.”

To reverse the trend, researchers recommend that affordable childcare could help by making it easier for other family members to work. Reversing cuts to tax credits to ensure that low income working families are supported; and tackling the high housing costs experienced by families, especially in the private rented sector.

Source: Cardiff University