Work IS the best route out of poverty – half the time

26th Oct 2012

Evidence shows once again that we must look beyond welfare reform and work incentives and consider job quality, pay and security.

Is work the best route out of poverty? This cliché has been pinging around again following Iain Duncan Smith’s interview yesterday, where he said that unemployed people need “to learn that it's the right thing to go to work”. On the face of it, the answer is a clear yes but if you look more closely at the evidence, it’s only a half-truth.

Proponents of the ‘work is best’ view often compare the relative income poverty figures for households where everyone is working full-time (3% before housing costs) with those where all adults are out of work (much higher at 55%). But the latter kinds of households are very different. It is not the case that if you move from being a workless to fully employed household, you immediately lower your risk of poverty to 3%.

Is there any proof of this? Fortunately, DWP publish some lesser known but equally (if not more) important figures on the events associated with moves out of poverty. These are broken down into changes to do with family type, non-job income and the job-related. It's based on a national cohort survey dating back to 1991.

The black bar in the chart below shows the chance of being out of poverty when someone in the family gets a new job – which is just over one half (56%). A new job has a similar impact as a new partner. The best chance is when a new full-time worker joins the family, which has a poverty exit rate of 76% (perhaps associated with a new partner!)

The reasons why work is not a route out of poverty for nearly half the families who get a job vary. It depends on the kind of job you get, how many hours you work, the hourly pay, security and chance of getting promoted or a pay rise. The jobs that people in poverty get are very likely to be worse than the ones done by households who are already all working full-time. 

Once again, the implication is that we must look beyond welfare reform and work incentives and consider job quality, pay and security. These are even harder to fix than the massive welfare reforms that kick in next year, but are crucial in making them effective in reducing poverty.