Low income by work status
- 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: 65% for unemployed families, 60% for economically inactive families, and (notably) 23% for those with some paid work.
- Almost half of all working-age people in low income now have someone in their family in paid work. This is a somewhat higher proportion than a decade ago. Note that these proportions are up to 2008/09 and are therefore prior to the recession.
- Three-fifths of all working-age people in low income do not have dependent children. This is a somewhat higher proportion than a decade ago, and the increase in the proportion who do not have dependent children has occurred within both working and workless families.
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 person 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 a breakdown of the low income working-age people by family work status. 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 third graph shows how the number of working-age adults who are in low-income households has changed over time, with the data broken down by working/workless families and with/without dependent children. 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 data source for all the graphs is Households Below Average Income, based on the Family Resources Survey (FRS). Income is disposable household income after deducting housing costs and the low-income threshold is the same as that used elsewhere, namely 60% of British 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 per cent. 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. Note, however, that the coverage of the surveys prior to 2001/2 did not extend beyond the Caledonian Canal.
- See the 2008 Joseph Rowntree Foundation report entitled Addressing in-work poverty.
- See the 2005 Joseph Rowntree Foundation report entitled Routes out of poverty.
- See the HM Revenue & Customs site on tax credits and tax credit statistics.