Working people can be among the worst off

Collage mit verschiedenen Berufen - Arbeiter im Handel,Industrie,Logistik,Managment, Handwerk,...The saying ‘ the rich get richer and the poor get poorer’ may be as old as the hills but when a report illustrates how millions of full-time workers are still unable to make ends meet, surely it’s time to ask: what’s going on?

My family are bored to the back teeth of me shaking my head every so often and saying ‘we’re going backwards to the Victorian age’, but when the Joseph Rowntree Foundation, founded by the Victorian businessman, philanthropist and social reformer Joseph Rowntree, reports full-time employment is no barrier to poverty, we should all sit up and listen, in particular the government and business.

So here are a few findings from the report, which was published earlier in February.

Firstly, you will not be surprised to learn that living standards have declined since 2008. You remember that, don’t you, when the banks effectively caused the economy to crash and the public purse bailed many of them out? We’re still suffering the consequences as although the economy is now growing, living standards for most of us have not followed suit.

The charity identifies the minimum income standard or MIS before being in a position where affordability is a struggle to be:-

  • £16,850 for a single person
  • £25,600 for a lone parent with one child
  • £36,060 for a single breadwinner with two children

Shockingly, 2.6 million households do not receive the required income to put them clear of the minimum income standard despite having at least one working adult. That’s more than 60% of homes with a total income below the charity’s MIS where there is at least one employed adult.

households_below_minimum_income_standard_15-02-16 Joseph Rowntree foundation
That means if you live in a house with at least one working adult you have a greater chance of not being able to afford an adequate living standard than you have being able to afford the cost of living. That’s insane.

Perhaps more worrying is there are around 600,000 households where every adult is in full-time employment but are living below the MIS.

The MIS is determined by asking members of the public to define what is needed to “live to an adequate level”.

Around 11.6 million people in the UK live below the MIS, or 28% of those the charity analyses. Before the banking crisis that figure, in 2008, was 21%, so your chance of falling below the minimum standard has increased.

The calculations were made by Loughborough University’s Centre for Research in Social Policy focusing on the start of the banking crisis to 2013-14.

The UK may have record numbers of people in employment but many of us are in a worse position than we were pre-crash. The report says benefit cuts are not being supplemented by improved employment prospects.

about_us_header Joseph Rowntree Foundation
Image: Joseph Rowntree Foundation

However, the good news is that the rate people are falling below the decent living standard is slowing. But until salaries catch up with the real cost of living, those of us who are not earning enough to afford a decent lifestyle will still make up a significant element of the working population.

The implementation of the national living wage of £7.20 ph in April will help, although the charity believes chances are we’ll find it simply isn’t enough for people to be able to reach and exceed the minimum income standard.

Even though there are more working families than ever who are struggling, there are also more millionaires.

The number of millionaires has risen by 41% in the past five years, around the same time increasing numbers of families have fallen below the minimum income standard.

One in 65 British adults are now considered to have millionaire status mainly as a result of rising house prices and stock market gains, according to Barclays’ prosperity index. Almost half of new millionaires, those who gained the status after 2010, live outside London and the south east with Reading, Cambridge and Birmingham among the most prosperous places whilst the east of England is the third most affluent area.

Bristol was ranked the UK’s fifth most prosperous city, while Newcastle was ranked 10th most affluent urban area.

And whilst the economic recovery and rising house prices has created more households which struggle it has also helped create more millionaires. Numbers of millionaires, though, are expected to slow down with just 9% more expected by 2025.

The analysis highlights the growing gap between the richest households and the rest of us. The richest 10% of households in Britain are currently estimated to own 44% of the state’s household wealth.

You may not be surprised to learn, a report which came out in May identified Britain as the “European capital of inequality” since the gap between rich and poor was the biggest in the EU.

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