Why are 300,000 families in full-time work still in poverty?
Almost 300,000 families with children are living in poverty despite all parents being in full-time work.
As part of our ‘Barriers to Work’ series, this briefing takes a deep dive into some of the key characteristics of these families.
Our findings suggest a number of factors are likely to be involved in explaining why these families are still in poverty.
These include low pay and job quality, ethnic background, geographic location, and inescapable costs like housing and disability.
- There are almost 300,000 families with children in poverty despite all parents being in full-time work. Almost one in five live in London (18%) and nearly half are single parent families (46%).
- Single parents, the self-employed, and Black and minority ethnic parents are significantly over-represented, and almost a quarter work in the health and social work sector (23%).
- Within our group of low-income families in full-time work, 78% of self-employed parents earn below the minimum wage. There are an estimated 41,000 low-income families in full-time work that are trapped in poverty because at least one adult is self-employed with very low or even negative earnings (business losses).
- Low-income families in full-time work have higher housing costs on average, and would need to work an average of 19 extra hours a week – a pay rise of almost £9,000 a year – to escape poverty.
We speak up for children and make sure their voices are heard.
We recommend that the government commission further research, including qualitative studies, into these families so that we can better understand the drivers and dynamics of low-income within this group and identify more targeted solutions.
In addition, the government should:
Fix the basic adequacy of social security:
- Benefits are too low for families to meet their essential needs. We desperately need to invest in the basic adequacy of social security. The most targeted way of doing that would be to increase the child element of Universal Credit.
Support families to overcome barriers to work:
- Our accompanying analysis reveals that almost two-thirds of the children in poverty (64%) are in families with at least one significant potential barrier to work or extra work. In a recent paper, we set out a wide range of ideas for potential solutions. Some actions, like reforming the taper rate and work allowances, could be taken immediately to support work incentives in Universal Credit.
- In the medium-term, we need a focus on improving the flexibility and security of work. This includes how we build upon current policies around paid leave, sick pay, reasonable adjustments and childcare.
- A serious review of how the DWP interacts with claimants and the quality of support they provide is also long overdue. Action for Children will have more to say on this in the months ahead.
