A startling revelation from the UK's Resolution Foundation highlights a stark disparity in living standards for lower-income families. The thinktank's research indicates that, at the current growth rate, it would take an astonishing 137 years for these families' living standards to double. This staggering figure underscores the profound challenge faced by a significant segment of the UK population.
The report further emphasizes a two-decade stagnation in disposable incomes, which has fostered a sense of unease and concern across the nation. The Resolution Foundation warns of potential political upheaval if pay growth does not accelerate. The thinktank's analysis reveals that, from 1965 to 2005, the typical disposable income of working-age families in the poorest half of the population doubled, growing by 1.8% annually after inflation adjustments. However, since 2005, progress has been sluggish, with disposable income growth for lower-income families increasing by only 0.5%.
The thinktank defines lower-income families as working-age households with disposable incomes below the national median and no one above the state pension age. These 13 million families, dubbed 'unsung Britain', have seen their increased workforce participation and unpaid care for disabled adults go largely unrecognized in terms of higher incomes or living standards. Ruth Curtice, the chief executive of the Resolution Foundation, underscores the limitations of work as a means to escape poverty, stating that despite working harder, these families have endured stagnant disposable incomes, shrinking pay rises, higher costs, and mounting health and care challenges.
The thinktank attributes the 'huge income slowdown' since 2005 to the drying up of pay rises. While average gross annual earnings for lower-income families have risen by £7,700 since the mid-1990s to £18,000 today, nearly three-quarters of this increase occurred before 2005. Additionally, steep cuts to working-age benefits have directly eroded living standards. The report also highlights that almost one in three working-age adults in lower-income families have disabilities, compared to fewer than one in five in better-off households. Furthermore, approximately 1 million people in this group provide at least 35 hours of unpaid care per week to adult relatives or friends.
Despite the challenges faced by lower-income families, the Resolution Foundation notes that taxes account for a smaller share of their budgets compared to better-off families. Council tax, however, is a notable exception, with the poorest households spending four times as much of their income on this tax as the richest.
