- 17% of children and working-age adults in poverty in 2018/19 lived in high work intensity households, up from 14% in 2008/09 and 9% in 1996/97.
The chart looks at the share of people living in households that are in poverty and have at least one adult in work in each year since 1996/97 in the UK. It is divided into higher and lower family work intensity. Higher work intensity families are those with all adults working and at least one adult working full time; and lower work intensity families are those where one adult is self-employed, only one adult works full time and the other adult does not work, or those families where adults only work part time.
Poverty can affect health when financial resources are insufficient to meet basic living needs, such as adequate heating for the home, appropriate clothing or adequate nutrition. Relative to out-of-work poverty, Rod Hick and Alba Lanau note that in terms of income, material deprivation and subjective economic distress, people in poverty living in working families are in a better financial situation. This suggests the income effect on health is weaker for this . However, other health effects can result from working in low-quality work or the stress of working, but failing to achieve a reasonable standard of living.
- The increase of in-work poverty has been driven by families with high and low work intensity – families where all adults work and with full-time work are increasingly in poverty too. People living in higher work intensity households comprised 17% of people living in poverty in 2018/19, compared to 14% 10 years earlier and 9% in 1996/97.
- People living in lower work intensity households comprised 47% of people living in poverty in 2018/19, compared to 42% 10 years earlier and 35% in 1996/97.
There are a number of explanations for the growth of in-work poverty. Partly, it reflects the fact that a higher proportion of families have a family member in work. The risk, however, of being in poverty and in work has also increased: for higher work intensity families the figure has increased from 7% to 8% over the past decade and for lower work intensity families it has increased from 29% to 32%. This increased risk reflects the growth in housing costs for working families and the faster growth of pensioner incomes, which has raised the overall median (increasing the income required to be above the poverty threshold).
The growth of in-work poverty has consequences for how poverty is tackled. Increasing work intensity for those in in-work poverty is not necessarily an option, and for those who it would be a solution this would require additional changes to childcare support and other structures, given the demographic of the non-working adults in these households. It also requires a shift in focus away from labour market entry to work progression and pay.
The growth of in-work poverty means changes are required to some of the policy measures aimed at reducing poverty, such as progression in work, job quality and security, as well as a more traditional focus on increasing household work intensity. This will require action from both employers and government.
- Poverty is defined as an individual living in a household with a net household income below 60% of the median in that year.
- Income is adjusted for household size to reflect economies of scale, for example, a household of four needs more income for the same standard of living as a household of one, but not four times as much.
- Housing costs are deducted from income, to reflect that people with lower incomes in particular have less choice about their cost of housing, relative to their income.
- Lower work intensity families are those where an adult is self-employed, only one adult works full time and the other adult does not work, or those families where adults only work part time. Higher work intensity families are those where every adult works, with at least one adult working full time.
Source: Department for Work and Pensions, Households below average income: 1996/97 to 2018/19