The changing face of poverty

debt smart empty pockets©iStock.com/Belyaevskiy

YOUNG people and those in work are now the most likely to be in poverty, a study from the Joseph Rowntree Foundation suggests.

More than a fifth of working-age adults without children are living in poverty according to the report, although the number of low-income pensioners has reached an all-time low.

Young adults - those aged between 16 and 24 are particularly badly affected, with more than a third of 16-19 year-olds and 29% of those aged 20-24 affected.

And impoverished working families are at an all-time high - outnumbering those where no one works for the first time.

Why?

In total, 13 million people in the UK are classed as being in poverty - that is, earning less than 60% of the national median wage after housing costs.

Private tenants

The number of people in poverty who live in privately rented housing has almost doubled over the past decade, from 2.1 million people in 2003 to 4.1 million in 2013.

People renting privately always pay a higher proportion of their income on housing than any other group, and the poorest households spend a larger proportion of their incomes on housing costs than the better off.

In fact, people with incomes in the lowest 20% spend 28% of their money on housing, while the richest 20% spend just 9% of their income on accommodation.

For private renters, those with incomes in the lowest 20% spend 55% of it on housing costs.

In comparison, social tenants in the same bracket spend just 33% of their income on housing costs.

Work isn't the answer

Over the past 10 years the labour market has changed dramatically.

The rise of zero-hours contracts and a massive increase in the number of low-paid jobs means that for many finding work doesn't solve the problem.

In fact, 40% of all the adults in poverty are in work.

While unemployment is down, two thirds of those who have found a job in the past year are being paid below the living wage, while some 1.4 million jobs don't guarantee a minimum number of hours.

Of those who were in low-paid jobs 10 years ago, only a fifth have completely left low-paid work now.

And wages are continuing to fall in real terms across the board. In 2008 the average wage for a man was £13.90 and £10.80 for a woman. In 2013, the average was £12.90 for men and £10.30 for women.

That's the average across the whole of the UK, from zero-hours cleaners to industry leaders.

But average incomes have fallen faster than high incomes, falling by 9% in the past five years - and the poorest tenth of people have seen their incomes fall by almost 10% since their peak in 2004/05.

Cost of living

Meanwhile, between 2003 and 2013, inflation rose 30% - but not everything has been increasing in price at the same rate.

Energy prices have risen by more than 150% over that time, water bills have increased by 70%, and the cost of public transport has increased 88%.

While phones, computers and TVs have barely increased in price in real terms, and clothing has actually become cheaper, food is 47% more expensive now than in 2003.

It's all well and good saying people need to economise, but many are struggling to meet the costs of basic goods and essential services.

Poverty's changing face

Poverty among pensioners is now at the lowest level ever recorded. In 1989 it peaked with more than 40% of older people counted as being in poverty.

But by 1993 that figure had dropped to below 30%, and by 2003 it was 24%. The most recent figures show that just 13% of pensioners were living in low-income households.

This may be partly as a result of Government spending cuts affecting them less severely, contrasted with the slashing of support for the under-25s.

Younger adults have always been more likely to be in poverty than other working-age adults, but in both the 16-19 and 20-24 age brackets, the proportion of those in poverty has increased 6% over the decade.

It's possible the knock-on effect of growing up in low-income households has also had some bearing on the increase in poverty among 16-24 year-olds.

While the number of children living in low-income homes has decreased, some 3.6 million children still count as being in poverty - and of these 2.2 million live in a home where at least one adult works.

Some 850,000 children living in poverty come from households where all the adults work.

Child poverty is thought to have cost the UK £29 billion in 2013, and its effects are long-lasting.

Fewer than 48% of children from poorer backgrounds achieve grades A*-C at GCSE, including Maths and English, and fewer than 20% of those who qualify for free school meals go on to higher education.

More than 20% of people who lack qualifications go on to be unemployed or under-employed.

Add to that the spread of low-paid jobs and short hours, and it's not difficult to see how many young adults find themselves in poverty.

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