Centre for Research in Social Policy

School of Social, Political and Geographical Sciences

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The economy may have turned the corner, but many are still struggling to make ends meet

Despite signs of economic recovery, nearly four in ten families with children are living on incomes below what they need and making up lost ground is going to take time.

Recent weeks and months have seen a growing assertion that following a long period of decline, we might just have turned a corner and 2015 may be the year when living standards once again begin to rise. Figures on wage growth in 2014 and the recent news concerning inflation mean that many could see above inflation increases in their wages in the coming year.

This tentative, moderate good news needs to be seen in the context of the large preceding fall in living standards – leaving many individuals with incomes well below what they need for a minimum socially acceptable standard of living, according to what the public think.

The latest in our series of reports looking at how many households are living on incomes below what is needed for an adequate standard of living, shows that between 2008/09 and 2012/13, the proportion of people living below this threshold increased by nearly a third. Within this, nearly a quarter of childless working age adults do not have the income they need to meet this standard and the risk of being unable to make ends meet faced by this group has increased significantly since 2008.

In the immediate aftermath of the economic crash of 2008, childless working age adults bore the brunt of the decline in living standards according to this measure. Since 2010, however, our analysis shows that it is families with children who have seen the greatest increase in the risk of having inadequate incomes.

In 2012, following on-going real-terms falls in wages and cuts to benefits and tax credits, 39% of people in households with children were living below the Minimum Income Standard, up from 31% in 2008. What this means in terms of numbers is that at least one million more children were living in families with inadequate incomes in 2012 than in 2008; at least 250,000 more children were living in families with less than half of the money needed for a minimum living standard in 2012 compared to 2008.

Families headed by lone parents are particularly at risk of having inadequate incomes. In 2008, 65% of people in these families were below the MIS threshold; by 2012 this had increased to 71%. Just over one in ten people living in lone parent households live on an income well below that needed to provide an acceptable standard of living.

It is clear that running counter to the rhetoric of economic recovery, the real story for a growing number of families – both with and without children – is that it has got much more difficult to make ends meet and provide the kind of standard of living seen as acceptable by the general public. Certainly improvements in employment prospects and above-inflation wage growth may begin to soften the impact of a sustained period of economic stagnation. But with so many having lost ground over this period, any improvement would require some big changes: to policy, in terms of rolling back planned cuts to in and out-of-work benefits; to earnings, in terms of a prolonged period of rising real wages; and to the labour market, in terms of ensuring a growth in secure jobs that pay a living wage.

In spite of the first signs of spring, in economic terms, the truth is that for many it is, and will continue to be, decidedly wintry.

 

 

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