The problem of low pay

Tesco Self-ServiceLow pay is a huge problem in the UK. Of the 11 million people currently living in poverty, 6 million have jobs. Some of this is due to under-employment – people who work, but can’t get full-time hours – but not all. For example, three quarters of children in working poor families have a parent who works full-time (see the Earnings section on page 97 of this report). It is entirely possible to have a full-time job and still not be earning enough to live on.

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Do people always create the same status hierarchies?

measure_up

It’s been a while since we talked about the inequality hypothesis on this blog. It’s also been a while since I’ve seen any coverage of it elsewhere. For certain politicians and commentators on the left it seems to have settled into the status of fact (“we know that inequality causes all sorts of social problems”), while everyone else seems to have just forgotten about it. The torrent of academic studies has also slowed to a trickle – like everyone’s got inequality fatigue.

The trouble is that there are still some really interesting questions that need answering. One of the most fundamental for me is whether more income inequality really translates directly into stronger differentiation of social status. Continue reading

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The Psychology of Poverty and Welfare Reform

In the last few weeks in the UK there has been a surge in high profile figures – from TV chef’s to government ministers – blaming ‘poor people’ for their poverty. In this guest post, Joe Penny from the new economics foundation summarises recent research from behavioural psychologists on how poverty itself makes it harder to make good decisions (building on Rob’s post earlier this week that went into one part of this research in more detail), and explains why this matters for welfare policy and reform.  

Picture 1First there was Jaime Oliver, claiming that he couldn’t quite grasp poverty in the UK, where people made choices between massive TVs and nutritious food. Then, more recently, Michael Gove suggested that the rise in people accessing food banks was a result of poor financial management, rather than genuine need due to falling living standards and benefit sanctions.

Oliver and Gove are, of course, not alone in thinking or expressing these views. Narratives of welfare dependency have become more common place and increasingly assertive under the coalition government;  the the so-called Skivers and Strivers dichotomy is a well-known case in point. Poverty, according to this perspective, is caused by a culture of deviance, idleness, and dependency. The poor are responsible for their own plight. They cannot be trusted to make the right choices for themselves – or society more generally – and so are in need of paternalistic guidance (hence the current raft of welfare reforms).

But recent research suggests that this ignores the way in which poverty changes all of our decision-making – as I explain in this post. Continue reading

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Money worries are cognitive handicap for poor people

money worry

I’ve been meaning to write about this for a while, but am only just now getting around to it. At the end of August, Science published a paper showing that worrying about money has a significant impact on poor people’s cognitive function; i.e. when you’re poor, money worries take up valuable brain-space, distracting you from whatever else you might be trying to achieve

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Digital inequalities: it’s not just about being online but what you do when you get there

In this guest post, Claire Preston unpacks the latest evidence on ‘digital inequalities’ – how disadvantaged groups can be further disadvantaged in their access to (and use of) the internet.

This year’s Oxford Internet Survey (OxIS) is just out and reports a “striking rise” in the use of the internet by low-income households and disabled people. The numbers of older people accessing the internet are also up; encouraging news for those who seek to lessen the digital divide. AgeUK’s  recent Itea and biscuits week is a case in point.

People using the internetBut there is plenty of evidence to support a continued need for such efforts: internet access remains far from uniform across the UK’s population. People in the highest income category are still nearly twice as likely as those in the lowest to use the internet (OxIS 2013)and the cost of the internet is the reason most commonly given for stopping using it (OxIS 2011). Disabled people are also under-represented in online environments. More than half (53%) of the 7.1 million adults in the UK who have never used the internet are disabled, according to recent figures from the ONS. Age too can be a barrier to the digital realm. Around 39% of over 65s have access to the internet, compared to 85% of people age 25-55, according to OxIS 2011. These figures also conceal a north-south divide. Older people in Surrey are more than twice as likely as those in Tyne and Wear to have internet access, according to AgeUK.

Behind these eye-catching figures, though, lie all sorts of complexities… Continue reading

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Marriage and Parental Investment in Children

Marriage ain’t what it used to be. Consider that:

  • In 1950, almost half of all women were married by age 20 and for men the age was 23. By 2010, the median age of first marriage had increased to about 24 for women and 27 for men.
  • More people are opting out of marriage. In the 1950s, about 10% of men age 30 to 44 were never married; the fraction was up to around 20% by 2010.
  • The divorce rate doubled between 1960 and 1980 (but has declined by 25 percent since then).
  • Cohabitation has increased, particularly for less educated men and women.

Largely as a consequence, many more children are being born out of wedlock. In 1950, 10% of births were out-of-wedlock; this increased to around 40% of all births in 2010. Most astoundingly, more than 70% of black children are now born out of wedlock.

The “retreat from marriage” is strongly patterned by race and social class. Although it is true that college educated men are getting married somewhat less than in decades past, almost all of the change has occurred among lower educated men (figure below).

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Should we get rid of corporation tax (part 2)

In the last post I talked about why so many people endorse the idea of completely scrapping corporation tax.  To briefly reiterate the main arguments:

  1. We don’t know who mostly bears the costs of corporation tax. So if what we really want to do is tax the rich beneficiaries of corporate profits, then we’d be better off raising capital gains and dividend taxes (or even the personal income tax at the high end).
  2. Corporation tax doesn’t work very well to discourage negative externalities like carbon emissions – a specific carbon tax would do this more effectively.

As I said last time, it seems to be economic gospel, even on the left, that the corporation tax is a ‘bad’ tax. Continue reading

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California climate policy inequalities: Win-win, lose-lose, or somewhere in between?

In 2006, California approved AB 32, a sweeping law to reduce carbon emissions that contribute to climate change. Fynnwin Prager, a researcher at the University of Southern California, examines the implications of AB 32 for economic inequality.

It is often said that policies have winners and losers. AB32 – California’s landmark cap-and-trade climate policy – has seen its fair share of both, and it is barely a year old. AB32 caps California greenhouse gas emissions – reducing down to 1990 levels by 2020 – and allows emissions rights to be traded between industries, so that the cheapest sources of reductions can be found. Earlier this month, a Sacramento Judge ruled in favor of AB32 in the latest – though surely not the last – legal challenge by pro-business groups. Since being initially passed in 2006 by Governor Schwarzenegger, AB32 has overcome further pro-business challenges at the ballot-box, and has dodged lawsuits from environmental justice groups during a long administrative review process. Continue reading

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A softening of attitudes?

BSA 30 coverYesterday, the latest British Social Attitudes report was released, and for once the story was about more positive attitudes around benefits. No more the headlines about ‘hardening’ attitudes; the headlines in the  BBC and Express talked about ‘softening attitudes’ (using the words of the official press release), or even that the ‘public’s rage against benefit claimants fades’. Given that I’ve spent the past year telling everyone that benefits attitudes are more positive than everyone thinks (like in this post that recently reappeared), this is something that you’d expect me to welcome.

But it’s not that simple. This is partly because I’m an academic, and my stock-in-trade is irritatingly disagreeing with the consensus (as my friends will tell you, this extends to pub conversations over pretty much anything…). But it’s also because if you get beyond a heartfelt desire to see change, the data are a bit ambiguous about what they show. In this post I look at the case for and against softening, and leave you to make up your own mind… Continue reading

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Should we get rid of corporation tax? (Part 1)

It’s famously difficult to get a group of economists to agree about anything. Lock a left and right wing economist in a room and ask them to come up with the best method of taxation, or the most effective way to grow the economy, and you’d die of old age before they ever reached a consensus.

There are, however, exceptions to the rule – and one of them is corporation tax. An area of taxation which you might think would have economists of the left and right in their default ‘at each other’s throats’ position, actually finds them in chummy agreement. As this episode of NPR’s Planet Money demonstrates (they quite literally sat a bunch of left and right wing economists in a room and tried to find something they agreed on); mainstream economic thinking basically says that taxing corporate incomes is silly, and that we should stop doing it.

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