United Kingdom

Low income by work status

Graphs on this page:

Supporting information:

Key points

  • Unless all adults in the family are working (and at least one of them full time), the risks of being in low income are substantial.  For example, in the three years to 2008/09, the risks of low income among working-age adults were: 70% for unemployed families; 57% for economically inactive families; and (notably) 28% for those with some paid work.
  • Over the last decade, these risks have increased for both all-working and part-working families: from 3½% to 5% for all-working families and from 24% to 28% for part-working families.  For workless families, the rates have remained broadly unchanged.
  • Among working-age adults in low income, the number in working families has risen sharply since 2004/05 and, more generally, has been rising since at least the mid 1990s.  As a result, more than half of all working-age adults in low income now live in families where someone is in paid work.  This is a rather different balance from a decade ago, when the majority were in workless families.  Note that these proportions are up to 2008/09 and are therefore prior to the recession.
  • Among working-age adults in workless families who are in low income, the number who were officially unemployed halved in the decade to 2008/09.  By contrast, the number in low income who are economically inactive rose somewhat.  As a result, the share of those in low income who are in unemployed workless families has also halved, from 20% of all those in low income to 10%.
  • Most of the rise in working families in low income has been among those without dependent children.  As a result, almost half of all working-age adults who are in working families but still in low income do not have dependent children.  This clearly has implications for the future efficacy of the tax credits system in alleviating low income among working families, as this system is mostly targetted on those with children.

Why this indicator was originally chosen

For working-age households, the risk of being low income depends crucially on the extent to which the adults in the household are working.

Definitions and data sources

In all the graphs, ‘pensioner families’ (i.e. those where at least one of the adults is of pensionable age) are excluded from the analysis.

The first graph shows the risk of a working-age adult being in a low-income household, with the data shown separately for the following family work statuses: all-working (single or couple, with one in full-time work and the other – if applicable – in full-time or part-time work); part-working (couples where one is working and the other is not plus singles or couples where no one is working full-time but one or more are working part-time); workless – unemployed (head or spouse unemployed) and workless – economically inactive (includes long-term sick/disabled and lone parents).  Self-employed families are not shown in the graph.  The right hand bars show the average for the latest three years and the left hand bars show the average for a decade earlier.

The second graph shows, over time, the number of working-age adults who are in low-income households, with the data shown separately for families where someone is in paid work and for workless families.  The third graph provides a further breakdown, with the data shown separately for families with and without dependent children.

The fourth graph shows a breakdown of the low income working-age adults by the work status of their family.  The outer ring shows the average for the latest three years and the inner ring shows the average for a decade earlier.  The self-employed are included in the ‘part-working’ category as their risks of low income are similar, and much higher than the ‘all-working category.

The data source for all the graphs is Households Below Average Income, based on the Family Resources Survey (FRS).  The data relates to Great Britain (FRS did not cover Northern Ireland until 2002/03).  Income is disposable household income after deducting housing costs and the low-income threshold is the same as that used elsewhere, namely 60% of contemporary median household income.  All the data is equivalised (adjusted) to account for differences in household size and composition.  Note that in 2007 DWP made some technical changes to how it adjusted household income for household composition (including retrospective changes) and, as a result, the data is slightly different than previously published figures.  The averaging over three-year bands has been done to improve the statistical reliability of the results.

The term ‘family’ is used to cover an adult and their spouse (if applicable) whereas the term ‘household’ is used to cover everyone living in a dwelling.  So, a young adult living with their parents would count as one ‘household’ but two ‘families’.  In analysing the rates of low income by work status, the work status is analysed by family whereas the income is analysed by household.  This is the main reason why the low income rates for workless families is much less than 100%.  Note that an alternative – and more technically correct – term for ‘family’ is ‘benefit unit’.  For a more detailed discussion of this issue, see the page on households, families and benefit units.  Note that families where at least one of the adults is of pensionable age are excluded from the analysis.

Overall adequacy of the indicator: high.  The FRS is a well-established annual government survey, designed to be representative of the population as a whole.

External links

Relevant 2007 Public Service Agreements

Overall aim:  Halve the number of children in poverty by 2010-11, on the way to eradicating child poverty by 2020.

Lead department

HM Treasury.

Official national targets

Reduce by a half the number of children living in relative low-income by 2010/11.

Other indicators of progress

Number of children in absolute low-income households.

Number of children in relative low-income households and in material deprivation.

Overall aim:  Maximise employment opportunity for all.

Lead department

Department for Work and Pensions.

Official national targets

None.

Other indicators of progress

Overall employment rate taking account of the economic cycle.

Narrow the gap between the employment rates of the following disadvantaged groups and the overall rate: disabled people; lone parents; ethnic minorities; people aged 50 and over; those with no qualifications; and those living in the most deprived Local Authority wards.

Number of people on working age out-of-work benefits.

Amount of time people spend on out-of-work benefits.

Previous 2004 targets

Halve the number of children in relative low-income households between 1998/99 and 2010/11, on the way to eradicating child poverty by 2020, including:

  • reducing the proportion of children in workless households by 5% between spring 2005 and spring 2008; and
  • increasing the proportion of parents with care on Income Support and income-based Jobseeker’s Allowance who receive maintenance for their children by 65% by March 2008.

As part of the wider objective of full employment in every region, over the three years to Spring 2008, and taking account of the economic cycle, demonstrate progress on increasing the employment rate.

As part of the wider objective of full employment in every region, over the three years to Spring 2008, and taking account of the economic cycle:

  • increase the employment rates of disadvantaged groups (lone parents, ethnic minorities, people aged 50 and over, those with the lowest qualifications, and those living in local authority wards with the poorest initial labour market position); and
  • significantly reduce the difference between the employment rates of the disadvantaged groups and the overall rate.

As a contribution to reducing the proportion of children living in households where no-one is working by 2008:

  • increase the stock of Ofsted-registered childcare by 10%;
  • increase the take-up of formal childcare by lower income working families by 50%; and
  • introduce by April 2005, a successful light-touch childcare approval scheme.

The numbers

Graph 1

Year In all-working familiesIn part-working

families

In workless

families - unemployed

In workless

families - economically inactive

In self-employed

families

1994/95 2% 20% 68% 53% 24%
1995/96 3% 20% 69% 52% 23%
1996/97 3% 24% 74% 58% 20%
1997/98 4% 24% 73% 54% 22%
1998/99 4% 25% 74% 54% 21%
1999/00 4% 25% 73% 57% 22%
2000/01 4% 25% 74% 56% 22%
2001/02 4% 23% 71% 58% 20%
2002/03 4% 25% 71% 59% 18%
2003/04 4% 23% 74% 58% 20%
2004/05 4% 23% 69% 54% 19%
2005/065% 26% 71% 57% 24%
2006/075% 28% 69% 58% 22%
2007/085% 28% 74% 57% 23%
2008/095% 30% 69% 57% 24%
Average 1996/97 to 1998/994% 24% 74% 55% 21%
Average 2006/07 to 2008/095% 28% 70% 57% 23%

Graph 2 and 3

Year In working families In workless families
With dependent children Without dependent children Total With dependent children Without dependent children Total
1994/951.5M 1.0M 2.6M 1.7M 2.2M 3.9M
1995/961.5M 1.0M 2.5M 1.7M 2.1M 3.9M
1996/971.6M 1.2M 2.8M 1.6M 2.2M 3.8M
1997/981.7M 1.2M 2.9M 1.5M 1.9M 3.4M
1998/991.8M 1.2M 3.0M 1.4M 1.9M 3.3M
1999/001.7M 1.2M 2.9M 1.4M 2.0M 3.4M
2000/011.7M 1.4M 3.1M 1.3M 1.9M 3.2M
2001/021.6M 1.3M 2.9M 1.3M 2.0M 3.3M
2002/031.6M 1.4M 3.0M 1.3M 2.0M 3.3M
2003/041.5M 1.4M 3.0M 1.3M 2.0M 3.3M
2004/051.6M 1.5M 3.1M 1.2M 1.9M 3.1M
2005/061.9M 1.7M 3.6M 1.2M 2.1M 3.3M
2006/072.0M 1.6M 3.6M 1.1M 2.2M 3.3M
2007/082.0M 1.8M 3.7M 1.2M 2.1M 3.3M
2008/092.1M 1.8M 3.9M 1.2M 2.3M 3.5M
Average 1996/97 to 1998/991.7M 1.2M 2.9M 1.5M 2.0M 3.5M
Average 2006/07 to 2008/09 2.0M 1.7M 3.7M 1.2M 2.2M 3.4M

Graph 4

Group Proportions
Average 1996/97 to 1998/99Average 2006/07 to 2008/09
In all-working families9% 12%
In part-working families (including the self-employed)36% 41%
In workless families - unemployed 20% 12%
In workless families - economically inactive35% 35%