A new study has been released by the Joseph Rowntree Foundation. It reveals that there are now 19 million people earning below the Minimum Income Standard. The figure has risen by four million between 2008/9 and 2014/15, taking the value from 15 million to 19 million. This accounts for an increase of 25% percent of the population up to a figure of 30%.

According to the report by the JRF, the Minimum Income Standard (or MIS) is “a benchmark of income adequacy. It is rooted in what the public thinks is a minimum socially acceptable standard of living.” The report shows that the number of families living below 75% of the Minimum Income Standard has risen. Previously it was 15% (9 million) and is now 17.5% (11 million) from 2008/09 until 2014/15. This information does, in fact, contrast with a fall in “relative poverty.” The JRF point out that this is due to the decline in median income relative to minimum living costs.

This figure is particularly shocking. The JRF uses the 75% mark as an indicator of poverty. People whose income falls below that mark are at a much higher risk of poverty and deprivation. Especially when compared with those who are above the Minimum Standard Income.The figures shown by the report indicate the potential for severe financial challenges. Many of these people are unable to afford their rent and bills without taking a payday line of credit. The government has a plan to support “just about managing families.” Prime Minister Theresa May referred to these families in her Tory Leadership speech, families earning enough to get by but unable to meet a decent standard of living.

Jobs London: Minimum wage is too low

The JRF defines poverty as “the point at which just about managing tips into not managing at all.” As far as they are concerned, the idea of a country that works for everyone just does not match up with rising rates of poverty. Campbell Robb, the JRF chief executive, was supportive of many of the measures that the government is taking to support those on low incomes. He made it clear that he felt there was far more to do. Making a statement in regards to the government’s stance on “just about managing families,” often referred to as “Jams,” he commended the government’s focus on those living on modest incomes. He said that it should never come at the expense of those even further down the income scale. According to Robb, the families who are just about managing today are the ones who are at the greatest risk of ending up in poverty soon.

Matt Padley is a Research Fellow at Loughborough University’s Centre for Research in Social Policy. He is one of the authors of the report. His studies show that the outlook for low incomes families who are already struggling is increasingly worrying. The number of people earning below the Minimum Income Standard has increased steadily. More and more people are earning less than they need to survive. This trend seems set to continue in the coming years. Data suggests that the cost of living could potentially increase by up to 10% by 2020. This would further increasing pressure on the budgets of many households. The government does have plans to raise the national living wage from £7.20 to £7.50. However, there are those who are unsure if this will be enough when compared to the rise in inflation and the cost of living.

Earning Below the Minimum Income Standard

Loughborough University ran an analysis using those who are earning below the Minimum Income Standard (MIS) as a benchmark of an acceptable living standard. They have worked out that the National Living Wage will be enough for single adults and dual-earning couples with children to earn a decent level of living. However, this only applies to those with low housing costs. If a family with children has only one person working full time, then their living standards are likely to decline. This will leave them as much as £104 per week short of what constitutes an acceptable living standard. While having both adults working would help these families, it’s not always possible. This is because 27% care for a child under the age of five while 16% qualify as sick, injured or disabled.

A lone parent may have one child in childcare and another at school. If this single parent is working full-time on the national living wage, he or she will be earning below the Minimum Income Standard by as much as £76 a week. This is set to be made even worse because of cuts to Universal Credit, something that is going to hit lone parents particularly hard. The JRF report also raises concerns regarding the recent decision of the Government. The Government have decided to freeze tax credits and working age benefits. Inflation rates continually increase while growth in wages fall behind. Together with this government decision, it is likely that the number of people who are unable to reach the minimum income standard are set to increase.

Growth in Total jobs does not always benefit low income families.

Many of the factors that have driven an increasing number of households below the Minimum Standard income could recur between now and 2020. Price of things like food is set to increase due to inflation. Yet the value of things like benefits and tax credits won’t increase alongside inflation. This will make the effects of inflation be felt even more sharply. Increase in the National Living Wage is certainly welcome. Yet it would not necessarily provide the same levels of greater support and benefit to everyone currently earning below the Minimum Income Standard.

There is no doubt that it would provide a method for assisting some people on low wages. However, it wouldn’t impact them all equally. Single people are more likely to receive the benefits from a higher national pay than families. Failies might rely more heavily on things like tax credits. There are projections that the real median income is set to grow by 3.8% by 2021-22. The JRF warns that “Real earnings growth tends to benefit high-income households more than low-income families. Planned cuts to taxes and working-age benefits would reinforce this pattern.” Even the record numbers of employment may not help with the rising numbers of families living below the Minimum Income Standard.

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Low Income Jobs Today

Work is one of the most important things that can help people get themselves out of poverty. However, it can’t help people reach a decent standard of living on its own. For one thing, even with a rise in employment, the number of individuals working in low-income jobs has increased. This means that, even though employment figures seem confident, many people still can’t afford a basic standard of living. Again, this disproportionately affects families. Single parents working full time have a 42% risk of falling below the Minimum Standard Income. The report also shows that certain groups were much more vulnerable to falling below MIS than others. Risk of low income is much greater for those with children than for those of single working age with no dependents. Pensioners were at unusually low risk. Lone parent households are at the most significant risk. Three in four lone parent families living below the Minimum Standard Income and nearly half below 75% of MIS.

74.5% of children with single parents earning below the Minimum Income Standard and 47.7% falling below the 75% mark, indicating an increased risk of poverty. The JRF has asked the government to take action in their next budget to address these problems. Katie Schmuecker is the Head of Policy at the Joseph Rowntree Foundation. She said, that in the end, it comes down to policy choices. Schmuecker went on to say that many of the decisions made by the government in recent years disproportionately favoured those who are already financial well off. Tax and benefit changes announced since 2015 have resulted in the richest half gaining while the poorest third of households have lost out financially.

Jobs in London must Give Help Low Earners

Schmuecker goes on to say that the Government’s next budget is their chance to increase opportunities for those in the country earning below the Minimum Income Standard. The government can help the economy to work for everyone by increasing living standards and lowering poverty rates. Robb expressed the need for the government to take steps to help the lowest income families in the UK. The coming years are likely to present many challenges for those who are just about managing to get by. This is due to rising inflation, the cost of living and the freezing of benefits and tax credits.

In response to the report, the government released a statement. The government said it was “determined to build an economy that works for everyone.” A million workers have had their pay increase as a result of the National Living Wage. The fastest wage growth for the lowest paid workers in 20 years as well as the freezing of fuel duty are signs that the government are working to help the poorest Britons avoid falling into poverty.

Felicity Jones
Felicity Jones is the founder of the Payday Loans Net blog and has been working tirelessly to produce interesting and informative articles for UK consumers since the blog’s creation. Felicity’s passion is travelling. She loves her job because she can do it from anywhere in the world! Whether inspiration hits her while sitting on the balcony of a French B&B, or whether she is struck with an idea in a roadside cafe in Moscow, she will always make sure that the idea comes to fruition. Felicity’s insights come from her knowledge gained while completing her degree in Economics and Finance as well as from the people she meets around the world. Her motto is: Everyone you meet has something valuable to teach you, so meet as many people as you can!

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