Numbers Below Minimum Income Standard Soar

Stuart Weir, 2015 Jan 30
Research from the Joseph Rowntree Foundation

The Joseph Rowntree Foundation has published research showing that the proportion of people living in households with an income below the Minimum Income Standard[1] (MIS) increased by nearly a third between 2008/09 and 2012/13.

The Minimum Income Standard (MIS) defines an ‘adequate’ income based on what the public think people need for a minimum acceptable living standard.

The key points from the foundation’s research

  • The proportion of people living in households with an income below MIS increased by nearly a third. The proportion below this level has increased every year since 2008, but most of the increase occurred in the second half of this period.
  • After the 2008 economic downturn, the most severe increase in the percentage unable to afford this minimum acceptable standard of living was initially among single people of working age. Since 2010, however, families with children have seen the greatest increases.
  • The risk of having a very low income – less than half the minimum income required – remains low but has increased sharply in the four years to 2012-13, rising from 4 per cent to 6 per cent.
  • Pensioners and couples without children remain the most likely to have an adequate income. However, a growing proportion of couples without children are finding themselves on an income that is just adequate rather than being well above the minimum.
  • Changes in employment status help explain the growth in the numbers below MIS among some groups. In particular, increased unemployment accounts for 70 per cent of this growth for single households under 35 between 2008-09 and 2012-13.
  • For most working households, however, the increase in numbers below MIS can be explained more by stagnant wages and cuts to in-work benefits than people having less work. This means the risk of  household falling short of MIS can increase, despite their work status remaining the same.
  • For example, for a couple with children where one partner works full time and the other does not work, the risk of being below MIS rose from 38 to 51 per cent, and for a lone parent working full time it rose from 26 to 33 per cent.

Changes to living standards

In the first part of the period, the most important influence was rising unemployment, combined with a period of relatively steep inflation not matched by increases in earnings. This especially hit the incomes of young working-age adults living alone, whose job prospects deteriorated the most.

Since 2010, however, continuing wage stagnation has combined with cuts in benefit and tax credit entitlements to the detriment of living standards; this has had an especially strong impact on families with children.

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