Work isn’t working

It will not be news to readers of this publication that most children in poverty in the UK now live in working households. Rising employment is a success story. Employment among parents has risen substantially over recent decades, particularly among single and coupled mothers. The relationship between poverty risk and low employment levels is well established, with a child’s likelihood of growing up in poverty falling sharply as work intensity and earnings increase. Yet the shifting nature of child poverty towards a largely in‐work phenomenon points to a deeper set of structural problems, and a labour market that is too low‐paid, insecure and inflexible to offer a reliable route out of hardship.

Working with IPPR, we analysed data from Understanding Society, the UK's largest longitudinal household survey. Because the same families are interviewed year after year, this survey allows researchers to track how people's circumstances change over time and identify the factors associated with moving into or out of poverty. Alongside this analysis, we carried out a new survey and focus groups with low‐income working parents to explore their experiences in more depth. Finally, we held policy workshops with experts, government officials and parents to test and refine recommendations for change.

The reality of in-work poverty

Today, around three in four children growing up in poverty live in a working household. A generation ago, that figure was less than one in two. This shift has not happened overnight, yet policy has been slow to adapt. Throughout recent decades, successive governments have prioritised boosting the employment rate on the basis that work is the best route out of poverty and any job is better than none. Far less attention has been paid to the quality, security and progression opportunities within work. While the minimum wage has increased significantly, average earnings have stagnated and the costs of housing, childcare, energy, food and other essentials have soared. Part‐time work carries a particularly elevated risk of poverty among families with children, but even full‐time work is no guaranteed protection from hardship. Indeed, the risk of poverty among children in full‐time working families has risen sharply since the start of the millennium, and almost half a million children in poverty now live in households where all adults are in full‐time work.

Consider Anna’s story. A single parent, she works 37 hours a week as an administrator in a GP surgery. Despite working full time, she lives ‘paycheque to paycheque’, budgeting carefully, rarely buying more than the essentials and checking her bank balance before every supermarket trip to make sure she can afford it. Anna is doing exactly what successive governments have encouraged parents to do: working hard and providing for her daughter. Yet one memory has stayed with her: 

‘I have always worked and tried to provide for my daughter independently. However, there was a time when I could not afford baby milk. I remember having to call a friend to ask for help… I remember thinking, why can't I afford this when I work and do everything right?’

Boosting incomes through employment and social security

A comprehensive child poverty strategy must consider the role of both social security and employment policy. The scrapping of the two‐child limit rightly acknowledged that adequate social security is indispensable to any credible child poverty strategy, including for families already in work. A strong social security system recognises that wage levels alone cannot account for family size and needs. Cash transfers will always play a central role in reducing child poverty, particularly when children are younger.

The policy offering for supporting parental employment and progression has been relatively underdeveloped to date. The new UK‐wide child poverty strategy, ongoing reforms to deliver a more personalised and less compliance‐driven jobs and careers service, and the transfer of adult skills policy to the Department for Work and Pensions, all present a unique opportunity to put in‐work progression higher on the government’s agenda.

With that in mind, our study focused on the role of income from paid work. It found that earnings are closely linked to how families move in and out of poverty. More than 60 per cent of exits from poverty involve a meaningful rise in earnings, and more than seven in 10 entries into poverty follow an equivalent fall. This may sound obvious, but it is a reminder that reducing in‐work poverty is about more than simply helping parents into any job.

The role of second earners

One of the most significant findings was the importance of the role of second earners in helping families escape poverty. Among children whose household gained a second worker, 54 per cent moved a meaningful distance out of poverty. By comparison, among households moving from no earners to one earner, 38 per cent experienced a similar improvement.

Yet second earners, who are typically mothers, face significant barriers to progression. The data showed that primary earners were twice as likely to increase their working hours and more than three times as likely to secure a substantial pay rise. However, when second earners did manage to progress, the impact was particularly powerful. 60 per cent of children whose second‐earner parent achieved a significant wage increase moved out of poverty, compared with 44 per cent where the primary earner achieved the same outcome. This suggests something of a paradox: one of the most effective routes out of poverty for many coupled families is also one of the hardest to access. While second earners have considerable potential to increase household incomes, structural features of the labour market continue to make progression harder for those working part time or in more flexible roles.

Opportunities for progression?

The findings also showed that opportunities for progression are not distributed evenly, with certain groups facing a double disadvantage. Single‐parent households, larger families and families with very young children are more exposed to income shocks and have fewer opportunities to increase earnings. Employment patterns reinforce these risks. Insecure and volatile work, including self‐employment and temporary contracts, increase the likelihood that a family will suffer income losses that push them into poverty.

By contrast, education appears to offer some protection. Parents with degree‐level qualifications were significantly more likely both to increase their earnings and to move out of poverty than those with lower qualification levels. When it comes to in‐work progression then, skills and training are a crucial part of the mix.

Our survey and focus groups helped to explain why progression remains difficult for many parents. Far from lacking ambition, many low‐income working parents had clear aspirations to earn more, develop new skills or move into better‐paid roles. The challenge was finding the time, flexibility and support needed to make this possible while balancing work and caring responsibilities. More than half of parents felt they were already working enough hours, while a majority did not believe that a pay rise, promotion or better job were realistically within reach over the next year.

Family-friendly policies

One reason that parents do not feel progression is in reach may be that access to family‐friendly employment practices is very limited. Only 40 per cent of low‐income working parents reported having access to flexible working arrangements. Access to enhanced sick pay, family leave, paid training and other workplace benefits was even less common.

Above all, parents consistently identified childcare as the defining constraint on progression. In our survey, the cost of childcare, limited availability outside term time and a lack of informal support from family or friends were the most cited barriers. For many parents in our focus groups, childcare considerations shaped virtually every aspect of their working lives. Parents were often acutely aware of the trade‐offs involved. While they wanted higher incomes, they also valued stability, less stress and time with their children, particularly in the early years. Progression was often viewed as something that would only become realistic when children were older and more independent. Nevertheless, many parents were keen for more support, particularly around skills and training, provided it was compatible with family life, aligned with their own aspirations and connected to genuine employment opportunities.

Constrained opportunity

Overall, the picture that emerged from the research was one of constrained opportunity rather than low aspiration. Parents make rational decisions in response to structural constraints and the realities of family life, even when those decisions limit their ability to progress. A stronger support offer for low‐income working parents will therefore require targeted improvements to childcare, social security, employment support and skills policy, alongside efforts to influence job design and incentivise certain employer behaviour.

The report identifies five clear priorities for reform.

• First, going further on childcare, the single biggest constraint on parental progression, by fixing flaws in the system and allowing more disadvantaged families to access free childcare from nine months.
• Second, strengthening work incentives for single parents and second earners through reform of universal credit (UC) work allowances and the in‐work conditionality rules.
• Third, testing a proper progression offer for parents on UC with specialist coaching, wraparound childcare, a training budget and personalised plans focused on long‐term earnings rather than rapid entry into low‐quality work.
• Fourth, prioritising parents in adult skills policy and expanding access to high‐quality, affordable learning designed around parents’ lives.
• And fifth, working with employers and unions to drive cultural change, expanding decent part‐time and flexible full‐time roles in sectors where rigid hours and weak progression are most entrenched.

For years, parents like Anna were promised that work would bring security. For too many, that promise has worn thin. The UK government’s child poverty strategy and its Get Britain Working agenda offers the chance to put that right.