NZ rates of in-work poverty examined
Research conducted by AUT’s New Zealand Work Research Institute and commissioned by the Human Rights Commission has found more than 50,000 working households live in poverty across Aotearoa.
The report, In-work poverty in New Zealand, examines the extent and characteristics of in-work poor households.
The research found that the overall in-work poverty rate was 7 percent before housing costs. This rate varies greatly across several demographic dimensions – for example, it rises to 12.3 percent for single-parent households, and 19.9 percent for two or more family households where only one adult is working.
“Poverty is a human rights issue. A whānau’s wellbeing, especially their economic and material wellbeing, lies at the heart of ensuring their human rights and dignity are protected,” says the Equal Employment Opportunities Commissioner Saunoamaali’i Karanina Sumeo.
“The study’s findings can help public policymakers better assess the characteristics of working households that are struggling to make ends meet,” adds Saunoamaali’i.
The findings show that without Working for Families (WfF) tax credits and the Accommodation Supplement (AS) the in-work poverty rate rises by 31 percent (up 2.2 percentage points). The biggest impact is for single-parent households where this rate rises to 21.6 percent without these two income sources.
“At first glance, the answer to the question ‘Is work the best antidote to poverty?’ would seem to be a simple ‘Yes’. But our study reveals the complex and pervasive nature of in-work poverty for more than 50,000 working households,” says Professor Gail Pacheco, Director, New Zealand Work Research Institute.
“Not surprisingly, the prevalence is greatest for our most vulnerable – single parents, children, Māori and Pacific peoples, ethnic minorities, households with low educational attainment, disabled people, and renters,” she adds.
The Human Rights Commission will be analysing the human rights implications of these findings to inform their advocacy work focussing on poverty, equality and non-discrimination.
“We hope the research can inform the development of targeted policies and investment to improve the wellbeing of working households living in poverty and to prevent others from falling into hardship,” says Saunoamaali’i.
“The data suggest the solutions to in-work poverty are as varied as those who live in this condition. However, all solutions must begin with robust evidence that accurately reflects the true extent and nature of in-work poverty in New Zealand from the outset,” adds Professor Pacheco.
Additional notes:
The In-work poverty in New Zealand research provides the first set of explorative steps in assessing and quantifying the prevalence of in-work poverty in NZ, including a characterisation of the affected population.
The research was carried out using the 2013 Census data. We define a “working” household as where at least one adult aged 18 to 65 inclusive is receiving positive wages or salaries for a minimum of seven months in the year preceding March 2013.
Poverty is defined as the total net household income (equivalized according to household size) falling below the 60% median income poverty threshold before housing costs.
Key figures at a glance:
Prevalence: Amongst working households, the proportion of households in poverty is 7.0 percent as at March 2013. There has been very little change in in-work poverty rates between 2007 and 2017.
Sensitivity: Definitions and thresholds matter. For example, when using the income distribution of a more restricted reference sample the prevalence of in-work poverty rises to 12.4 percent.
Role of Working for Families (WfF) tax credits and the Accommodation Supplement (AS): Inclusion of these two income sources make a sizable impact on in-work poverty prevalence. Without both income sources, the in-work poverty rate rises from 7.0 percent to 9.2 percent.
Gender: 7.7 percent of adult females are associated with an in-work poor household, while for men this number is 6.6 percent.
Children: 10 percent of children living in working households live in poverty, compared with 7.2 percent of adults in working households.
Ethnicity: Households with at least one adult with prioritised ethnicity of Pacific peoples experience the highest in-work poverty rate compared with households of other ethnicities.
Disability: Households with at least one disabled adult have a higher rate of in-work poverty of 9.5 percent compared with households without a disabled adult at 6.6 percent.
Household structure: The lowest in-work poverty rate is observed for households comprising a couple without children (4.8 percent), followed by a couple with child(ren) (6.3 percent) and single adults (6.4 percent). Higher rates exist for single-parent (12.3 percent) and multi-family households (9.6 percent).
Additional earner: Having a second worker in the household reduces the in-work poverty risk substantially. For example, for couples with children and only one adult working, the in-work poverty rate is 13.5 percent; this falls to 1.9 percent if there is more than one adult working.
Useful links:
- Read the report, In-work poverty in New Zealand