Labour Market

Stop denigrating work – it’s the best route out of poverty

Most people in poverty in the UK are white.

According to the Department for Work and Pensions (DWP) report on UK poverty published in March, a whopping 81 per cent of those individuals in households with income of less than 60 per cent of the national median are white.

Individuals of Pakistani or Bangladeshi origin, on this metric, do far better: making up just 5.5 per cent and 2.5 per cent of the in-poverty population. What we really need then, is to have our government start prioritising reducing white poverty.

I suspect most of you detect something fishy in the above statistical statements. They do not pass the smell test. In fact, the statistics are pretty meaningless.

To put it simply: most people in poverty are white because, well, most people in the UK are white. Clearly, what really matters is not the raw numbers, but the relative risk of being in poverty. Judged by this metric, the real story is the complete opposite of that implied: just 15 per cent of white people are in poverty in the UK, compared with 38 per cent of Pakistanis and 39 per cent of Bangladeshis.

Dodgy statistics

One would think that commentators, policy analysts and politicians who give a moment’s thought to this issue would realise this. Yet a variant of this bizarre way of thinking and distorted representation of poverty manifests itself in the UK media every day.

“Most people in poverty are in work, earning their poverty” claimed Owen Jones in May. He was responding to a Theresa May television interview where she claimed that work was the best route of poverty. Just last week, the economics editor of the Independent newspaper, Ben Chu, tweeted “don’t let people tell you people are in poverty because they don’t work”.

As a matter of fact, again, Chu and Jones are correct. Most adults who are in poverty are working (55 per cent of the total). But is this what really matters?

These figures are again mainly a construct of the fact that many more adults work than do not. The relative risk of being in poverty is, in fact, far, far higher for those who do not work than for those that do: 39 per cent of adults who do not work are in relative poverty, compared with just 10 per cent of adults who are working.

Mitigating the risk of poverty

This is important. In recent years, there has been a bizarre fetish for denigrating work as a route out of poverty by those on the left. Whether this is cynical rhetoric to keep pushing for policies such as more generous redistribution and increased minimum wages or just a misunderstanding of the statistics, remains to be seen. But the result is a continued call for more to be done about “in-work poverty.”

What people appear to want is for work to be a cast iron guarantee against relative poverty. A good ambition, but one that only really makes sense if we are talking about full-time, year-round employment. Yet we can also see that a lot of people in poverty actually do not work full-time.

The same DWP dataset as above highlights that a mammoth 55 per cent of individuals in workless households are in poverty. This falls to 24 per cent for those in households with at least one person in part-time work, to 20 per cent for those in couple households where one person works full-time or at least one person is self-employed, and to just four per cent in single or couple households with at least one person in full-time work.

In other words, an increased degree of attachment to the labour market reduces the probability of being in poverty substantially. Working, and working longer hours, appears an important way of getting out of poverty. The implicit suggestion that the story of poverty is about low wages for full-time workers appears, on these statistics, to be particularly fallacious.

Work pays

Of course, moving into full-time work is easier said than done for many people. Those already in full-time positions are more likely to be the highly skilled, experienced and productive. Even if everyone currently in poverty looked for full-time work, they would be unlikely to find it.

But that implies a much more complex and nuanced policy challenge than the oft-stated desire to increase tax credits or jack up the minimum wage to cure poverty.

To imply that work does not reduce poverty on the grounds that most poor people already work is like claiming that exercise does not reduce obesity, given most obese people already exercise. Clearly, doing some is better than nothing, but doing a lot more reduces the probability of obesity substantially.

The same applies to work and the prospect of being in poverty. Left wing commentators should stop denigrating work’s value.


This article was first published in City AM.

Ryan Bourne occupies the R. Evan Scharf Chair for the Public Understanding of Economics at Cato. He has written on a number of economic issues, including: fiscal policy, inequality, minimum wages and rent control. Before joining Cato, Bourne was Head of Public Policy at the Institute of Economic Affairs and Head of Economic Research at the Centre for Policy Studies (both in the UK).

1 thought on “Stop denigrating work – it’s the best route out of poverty”

  1. Posted 10/02/2020 at 22:13 | Permalink

    If work was so great the rich would do it.

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