UK thinktank forecasts 137-year timeline for doubling of living standards among lower-income families
The Resolution Foundation has issued a stark warning that a two-decade stagnation in disposable incomes for millions of UK households risks fuelling “further political disruption” unless pay growth accelerates, as reported by The Guardian.
According to the thinktank’s analysis, the typical disposable income of working-age families in the poorest half of the population has grown by just 0.5% a year since 2005, after adjusting for inflation and housing costs. At this crawling pace, it would take 137 years for their living standards to double.
This marks a dramatic slowdown from the four decades to 2005, when incomes for this group doubled after growing by 1.8% a year on average. In the final decade of that period, growth hit 4% a year, putting a further doubling within sight in just 18 years.
The Resolution Foundation defines these lower-income families as working-age households with disposable incomes below the national median and containing no one over the state pension age. It describes this group of 13 million families as “unsung Britain”.
The thinktank states that the “huge income slowdown” since the mid-2000s has been driven by pay rises drying up. For someone in a lower-income family, average gross annual earnings have risen by £7,700 since the mid-1990s to reach £18,000, but nearly three-quarters of that increase occurred before 2005. It also says steep cuts to working-age benefits have directly eroded living standards.
Ruth Curtice, the chief executive of the Resolution Foundation, stated that the figures show work is “not a guaranteed route out of poverty”. She added that these families, while widely courted by politicians, have seen disposable incomes stagnate as they grapple with shrinking pay rises, higher costs, and growing health and care needs.
The analysis highlights specific pressures on this group. Almost one in three working-age adults in lower-income families have a disability, compared with fewer than one in five in better-off households. About 1 million people in this group provide at least 35 hours a week of unpaid care to adult relatives or friends.
While stagnant incomes have also affected better-off families, the Resolution Foundation found a key difference in how taxes impact budgets. Taxes account for 12% of poorer households’ budgets, compared with 31% for better-off families. Council tax is a notable exception, with the poorest households spending four times as much of their income on it as the richest.
The thinktank says the long stagnation has created a “mood of unease” across the country, and it warns that the increased workforce participation and greater unpaid care provided by these families since the 1990s have not been rewarded with higher incomes or living standards.
