In-work poverty is the most distinctive characteristic of poverty today. For the first time, it outstrips the levels of poverty in workless households.
Although successive governments have maintained that work is the best route out of poverty, the study by Cardiff University academics says the risk of poverty for adults in working families grew by a quarter over the past decade.
Low pay is a trigger for in-work poverty but the primary determinant is the number of workers in a household, with single-earner families at a very significantly elevated risk of hardship, the study says.
Rod Hick, a social policy lecturer who led the research, said: "Tackling in-work poverty requires rethinking our approach - it's about improving the circumstances of the whole household, not just those of an individual worker, and promoting employment is key."
The findings had implications for low-income families where one adult partner in a household worked while the other looked after the children and home, he said. "It's increasingly challenging to have that type of family structure. The poverty risks for families in that position are pretty high."
The minimum wage could help to reduce poverty, but the relationship between low pay and in-work poverty was weaker than often assumed, Hick said. Most low-paid workers were not classified as poor while there were other earners in the household.
The study found in-work poverty was disproportionately concentrated in households in private rented housing, who have been hit by a combination of rising rents and caps on housing benefit. The continued growth of this form of housing tenure is projected to increase numbers facing in-work poverty.
Hick said: "If policy does not do more to tackle rising housing costs directly, then it seems likely that these will eat up gains made elsewhere - for example, in terms of the planned increases in the minimum wage."
The rise of in-work poverty should be tackled through three main policies, the report says: greater provision of free and affordable childcare to enable both adults in a household to work; a reversal of cuts to tax credits and universal credit; and action to tackle high rents in the private rented housing sector.
Comment: The UK's employment market is stagnant leaving people with little option but to take work which often doesn't pay a living wage and government cuts to social programs leaves working parents in poverty; the housing bubble has forced people to pay exorbitant rents for many years and there are few plans for social housing. Meanwhile, the UK's deficit continues to rise.
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Tax credits, which supplement income for people on low wages, had proved highly effective in reducing in-work poverty, the study found. Although cuts to tax credits and universal credit had proved controversial, Hick said cuts to a range of benefits, including housing and child benefit, were also significant.
"We need to think of social security as a whole and not just think the only thing that matters is tax credits," he said.
The report analysed data from the Households below average income report for 2014-15, which is the most recent available. This was compared with reports for 2004-5, 2007-8 and 2010-11, along with looking at Understanding Society, a survey of about 40,000 UK households.
- House prices, including rental prices have skyrocketed to monumental proportions. Unless you got into property at the right time or have help acquiring one, you are immediately on the back foot.
- Wages are stagnant. Despite private companies making profit year on year and the markets doing 'well' most of these profit are absorbed at the top of the food chain. At the bottom you get the left overs. It's not unheard off for people to go multiple years without any kind of payrise and when you get one, its basically less than a grand. On the other hand, senior managers, directors and traditionally respected professions e.g. doctors, lawyers etc do well for the most part but sadly these sorts of domain is not where the majority reside.
- Britain is kind of expensive. Prices are constantly going up year on year. Some of them are just extortionate. Prices only know one direction, they never decrease... only go up. Couple this with your stagnant wage and you see a problem emerge.
To have a decent life, you either need to be single or if partnered with kids, you need both parties working and earning a decent wage otherwise you'll eventually start to struggle especially when met with unexpected costs and when you start taking on too much debt to finance your life.
In short, the economy is kind of failing the average citizen.
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