Is work still a route out of poverty?

Growing numbers of people are living in poverty, despite working.

Over a million more people with a job have been pulled into poverty since the start of the decade. In total, 7.4 million people in working households are now in poverty – skipping meals, getting into debt, going without the basics, even though they are in jobs.

What’s changed to push so many more people into poverty and why is work failing to lift families out of poverty?

Policy changes

Policy changes over the last eight years, such as benefit cuts and pay caps, have resulted in millions of families losing money in real terms.

The number of children growing up in poverty, despite living in working households, is set to be 1 million more this year than in 2010, according to a report by the Trade Union Congress (TUC).

The report highlights that policy changes have been the reason for pushing 600,000 of these children with working parents into poverty.

For example, families where both parents work in the public sector have lost £83 a week in real terms; families with one parent in the public sector and one in the private sector have lost £53; and families with both parents in the private sector have lost £32.

Low pay

Around 22% of all employees earn less than the real living wage (RLW), according to research by the Resolution Foundation.

The RLW is currently £8.75 per hour, or £10.20 in London, and around 5.9 million people earn less than this. It is an independently calculated figure based on what people need to get by – earning less than this may push you into in-work poverty.

The industries in which low pay is most common are accommodation and food services, where 58% of workers are low paid; wholesale and retail where the figure is 33%; and agriculture where it is 31%.

Cost of living

For families that have been affected by austerity and low pay, the rising cost of living has been a further cause of in-work poverty.

For example, the increase of low income families moving from social to private renting has increased costs by around 23%.

This is shown by the fact that 29% of low paid people have fallen behind on their rents, according to a survey by the Living Wage Foundation.

On top of this, factors like rising costs, expensive travel and household bills are putting more pressure on working families.

37% of people who are low paid have had to skip meals for financial reason; 30% walked to work because they can’t afford travel; and 43% have fell into arrears with their household bills.

What is the real impact?

The impact of in-work poverty is clear through the conversations we have with people.

Every day we hear from working people who range from just about managing to living in destitution, even though they have jobs.

Single mum of two, Emelia, said: “I ended up working 60 hours a week and I still could not make ends meet! I ended up in debt, and I worked 12 hours a day or more with nothing to eat.”

Julie said: “I only earn on average £130-150 a week. I have a son to feed… I’m in a house I can no longer afford. Council Tax is crippling me also. What can I do?”

Pritie Billimoria, Head of Communications at Turn2us, said:

“If you have a job, you should not have to struggle through each day being forced to make impossible decisions such whether to feed yourself and your family or keep a roof over your head.

“Most of the people coming to us are now in work but desperately seeking financial support as they can’t make ends meet.

“Low pay, employment practices, policy decisions, self-employment, part-time work, pay-gaps and the rising cost of living are having a compounding effect on the daily lives of families across the UK.

“Work needs to be a route out of poverty so people are not left dealing with the intolerable stress and anxiety that their wages don’t cover their basic costs of living.”

If you are stuck in low pay, find out what help is available on our ‘In Work - On a low income’ page.