Poverty is about income - everything else is a distraction

When the Equality and Human Rights Commission (EHRC)  recently reported that 'young people are facing their worst economic prospects for several generations' I, and no doubt many other people, could see the truth of this in their own communities.

Older generations of working class people who entered employment from the 1940's to the 1970's often left school with few academic qualifications. Nevertheless they mostly got jobs with holiday pay, sick pay, and modest occupational pensions. They either got a secure Council house in which they raised their families, or were eventually able to buy their own homes.

For their grandchildren and great grandchildren, it's a very different story. With varying levels of educational qualifications, including degrees, many are finding it difficult to get a decently paid, secure job which would enable them to leave the parental home. When working in casual, often zero-hours jobs, even renting a small flat seems out of reach. Owning their own home seems an impossible dream.  

Responding to the EHRC report, Duncan Exley of the Equality Trust said: “This is what living in such an extremely unequal country means. More and more people, most of them young, are being locked out of opportunities and privileges many of us have taken for granted.

“This isn’t a simple division between generations. We all want our children to have a decent, secure job, and a roof over their head. We want them to do better than we have. But that’s not possible when the only real beneficiaries of our distorted economy are a tiny wealthy ‘elite’ and their offspring. 

“Much of this is made worse by bad government policy. We don’t need to increase the inheritance tax threshold, because we don’t need to help millionaires pass on their wealth. We need to help the millions of people struggling to pass anything on at all. That means a drastic rethink from Government, and a genuine focus on policies that reduce overall inequality.'

And yet, in government circles, and amongst those who have most influence on government, this stark economic reality often seems to be ignored in favour of redefining poverty, so that symptoms of poverty are seen as the causes of it, with the implication that those living in poverty have, in part, brought it upon themselves.

The Centre for Social Justice, founded by Iain Duncan Smith, talks about five Pathways to Poverty - family breakdown, educational failure, worklessness and dependency, addiction, and serious personal debt. These appear to have been adopted by the Secretary of State as a new way of measuring child poverty, and the basis for his abolition of the Child Poverty Act.

Yet it would seem obvious that four of these things are very often symptoms of poverty, not causes of it. And as for worklessness - the IFS stated last July that almost two thirds of children in poverty now live in working families, so low pay seems to be a far bigger driver of poverty than worklessness.

And consider this - the number of households containing a disabled person living in absolute poverty rose by ten per cent in one year - the fourth year of the coalition government. This dramatic rise over one year had everything to do with government policy, namely welfare reform, and little if anything to do with social factors.

Poverty is, first and foremost, about income or the lack of it, and for most people in poverty this is now determined by economic and political factors way beyond their control. Placing social factors before family income when analysing poverty is placing the cart before the horse, and placing the onus on the relatively powerless individual rather than the powerful economic and political forces which the EHRC report shows are now shaping the prospects of the young.

Of course the government will be reluctant to concede this, or acknowledge the truth of what Pope Francis has said, that 'Inequality is the root of social evil'. If they concede that point it would have uncomfortable ramifications. It would make some redistribution of wealth the obvious solution, meaning higher taxes for the wealthy – the exact opposite of the direction currently being taken by the government.

The evidence of what a boost to family incomes can do for people's future prospects is available and mounting. Many experiments with a Basic Income have shown very positive effects, but another experiment which occurred almost accidentally in the Great Smoky Mountains of North Carolina is highly illuminating. It indicates that the social problems currently being named as Pathways to Poverty are often symptoms of poverty, and can be reduced by a sustained and significant boost to family incomes.

Researchers led by Professor Jane Costello were studying the mental health and development of children in low income families in a rural community. Four years into the research, around a quarter of the families became unexpectedly entitled to a share of the profits of a casino which had opened on Cherokee tribal land. The Cherokee families' incomes were boosted by about twenty per cent. Over the following years, the researchers continued to measure all the children's mental health and wellbeing, and the changes in those which had received the income boost were remarkable.

For those whose families had received the extra income, "The frequency of behavioural problems declined by 40 per cent, nearly reaching the risk of children who had never been poor. Already well-off Cherokee children, on the other hand, showed no improvement. The supplements seemed to benefit the poorest children most dramatically."

The researchers attributed the dramatic change in the children to the improved circumstances for their parents. Relationships improved because they were under less stress and argued less about money. "We know that the thing poor couples fight about the most is money," a researcher said. "Off the bat, this means a more harmonious family environment." And a harmonious family environment allows children to thrive.

The research team followed the children into youth and adulthood. 'Minor crimes committed by Cherokee youth declined. On-time high school graduation rates improved.' And by 2006, Professor Costello could make another observation: the earlier the supplements arrived in a child’s life, the better that child’s mental health in early adulthood. Compared to those who hadn't benefited from the extra family income, they were "roughly one-third less likely to develop substance abuse and psychiatric problems in adulthood".

We have become accustomed to ministers talking about people at the lower end of the economic scale as a problem to be dealt with, using a lot of stick and very little carrot. Jeremy Hunt has said the working poor need to acquire pride and self respect, and the government can help them do this by cutting tax credits. Iain Duncan Smith thinks that people who are too ill or disabled to work are more likely to get a job if he reduces the relevant benefit by £30 per week.

Yet there is growing evidence that if we can reduce poverty and inequality by increasing the incomes of the poorest, many social problems will be reduced too. And poverty does primarily mean not having enough money. All the other measures which the government would prefer to use, like poor educational attainment or personal debt, spring in large part from families simply not having enough money for a decent life in the first place.

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© Bernadette Meaden has written about political, religious and social issues for some years, and is strongly influenced by Christian Socialism, liberation theology and the Catholic Worker movement. She is an Ekklesia associate and regular contributor. You can follow her on Twitter: @BernaMeaden