The working poor

Opinions on poverty are often formed with little first - hand understanding of the impact of on-going material hardship.

A 2017 MSD paper estimates 40 per cent of children in material hardship have working caregivers. These families are facing undue hardship. They are households that cannot escape hardship despite at least one adult working full time.

The most important thing is that we know that a sizeable portion of the poor kids come from working families.

The effects of low wages - found in a 2018 MBIE report that analysed tax records - might be obvious to some. Low-wage workers have more short-term jobs, hold multiple jobs at once, and find themselves on the benefit more often. We have increasing numbers of people employed on contract work, as-and-when needed, and work that can just change at any time.

Research consistently shows poverty / hardship leads to more ill-health, much lower life satisfaction, much more associated with crime, and lower educational attainment. These are all of the things we absolutely don't want in society.

In New Zealand, we pay low wages and work long hours. By comparison Australians earn on average 32 per cent more, Canadians 22 per cent and the British 9 per cent.

The working poor - You could work all week and have only $20 to show for it.

You could be mother-of-two Joanna, working a retail job in Henderson, with take-home pay of $550 eaten up by rent of $530 every week.

This isn't a story about rental prices in Auckland. This is a story about low wages, high living costs, and the working poor. And it's a story that's increasingly being told around the country.

For almost two years, a solo mum in Motueka has struggled to find a home for her family. The working mum and her young son have been homeless. They have couch-surfed, stayed with friends, slept in a car and stayed on the floor of a family member's home. Flooding during the February storms meant they were displaced again, the tent they had been living in was damaged, the domain they were camped out at now closed.

Unless you have a safe place to live with privacy and security, it isn’t a home. And without a proper home life is very difficult to manage.

Many kids won't have the stationary they need for school, they won't have warm clothes, lunch to eat, clean undies, their own bed tonight to sleep in or shoes on their feet.

A husband works 40 hours a week as a mechanic, earning $20 an hour. After tax, he gets $460. But their rent is $330. Then there's power, and petrol. Other things come up and they've taken out loans, because as the saying goes, they've had to rob Peter to pay Paul. By the time they get to buying groceries, they are looking at $80 to feed five people - two adults and three children.

Brand new doesn't exist for them, instead they have op shop things. Gone also are the days of having meat and veggies on the table every night. They now often have noodles, eggs and baked beans. The wife and husband often skip meals to feed the kids. Sometimes, the wife doesn't have tea at all and doesn't say anything to her husband so he won't feel bad.

Unemployment is at its lowest in a decade but wage growth has stagnated. So you can get a job, but it might not cover all the bills. 

Sitting between employment rates and wage statistics are the working poor - employed, but doing it hard. 

Joanna, is 49, and has been behind the counter at a major New Zealand retailer for almost 20 years. It takes Joanna around 40 hours at $20.40 an hour - $4 above the minimum wage - to earn the week's rent. Her $550 weekly pay cheque - after tax, KiwiSaver, union fees, and $20 tucked away for Christmas - is practically gone before it's in her hand.

A $70 accommodation supplement from Work and Income helps - but it still won't cover the bills. She has to reapply for it every three months, which is insulting, She works bloody and has to take time off work to go to the WINZ office to do that. And it won't feed her two boys, who are at university. They each pay board of $140 a week, which helps put food on the table and keeps the lights on.

They couldn't afford to pay more, because they're struggling students. If they wanted to move out and do their own thing, she just couldn't afford to stay there anymore.

So what's Joanna left with? Not enough to pay for parking, of $25 a week, at the mall where she works. She kept getting tickets because she wasn’t paying for parking … so she has been riding a bike to work.

She sits tight, keeps to a strict budget, and doesn't ask the landlord to fix anything for fear the rent will increase. But what if the car breaks down? Joanna has asked Work and Income for help before, and the response is a firm "no". They just say, 'You're on good money, your wage is good'

Another, a single mother, earns $800 a week. Then you deduct $500 for rent and $300 for childcare. She is a nurse; she has got a degree and training. It's not just people who you might automatically think of.

Rentals are so expense. If people can’t get a State house they have to go for a private rental … you can't find anything under about $350, and that will be a crappy little studio. Average rental in Auckland (January 2017) $528, North Shore between $505 - $693; Rodney between $442 - $553; South Auckland between $449 - $607; West Auckland $451 - $579; Mangere 3 bedrm $495 and 4 bedrm $550 - $700.

There is no official ‘poverty line’ in New Zealand as there is in other countries and no formal agreement about exactly how to measure poverty.

There is general consensus however, that the strongest indicator of poverty is your level of income. There is also some consensus that an income level set at 60% of median household disposable income after housing costs is a reasonable level of income to protect people from the worst effects of poverty.

The current minimum wage is $16.75 x 35 hours per week equals $586 per week. Deduct tax at 17% which is $99.62 leaving a net pay of $486.38. Work & Income rates 28hrs a week as full time work. The lowest average rent for South Auckland mentioned above is $449.00, leaving you $37.38 to live on.
 

Ask yourself – how would I get by if I had to provide for myself and family out of this income? This is the daily reality for hundreds of thousands of people in New Zealand.

Some groups are more likely than others to be in poverty: Beneficiaries, children, Māori and Pacific peoples, and sole parents are more likely to experience poverty than other groups. There is a growing group of older people.

The super was calculated on the assumption that you would be mortgage free and own your own home by the time you qualified for superannuation. The single rate nets you about $371 a week. How is that looking after you have paid your rent of $449?

What does poverty mean for people: Being in poverty means experiencing hunger and food insecurity, poor health outcomes, reduced life expectancy, debt, and unaffordable or bad housing.

There is not enough help available when you really need it

Benefits are not enough to live on with dignity – this is the real issue.

The resources of organisations providing emergency assistance are stretched.

The benefit system is complex and people are often not made aware of their entitlements.

Housing assistance is inadequate.

With the best budgeting skills there still isn’t enough to pay the bills

Because people in poverty must survive on very low incomes, they are adept at budgeting and making ends meet.

Contrary to the popular myth, people in poverty don’t spend all their money on alcohol, smokes and gambling.

Inadequate income is the real issue affecting the ability of people in poverty to manage their finances.

Debt can be a problem for some low-income people, but debt is often linked to tragic circumstances.

Debt and problems managing money isn’t just an issue for people in poverty.

Living on a benefit is not a ‘lifestyle choice’. Nor is living on a benefit a good ‘lifestyle’.

Few women receiving a benefit are unmarried teenage mums.

Most sole parents stay on benefits for a short period. and usually only while their child is young.

There is some benefit fraud, but most debt to Work and Income is the result of negotiated ‘recoverable assistance’ loans or ‘Innocent Overpayment Debt’.

Getting a job doesn’t solve the poverty problem

Employment alone does not solve poverty.

Most beneficiaries want to work. International research does not support the assumption that beneficiaries lack a work ethic and are content with the beneficiary ‘life-style’.

Obtaining work in itself does not guarantee that poverty will be alleviated. Many jobs are ‘precarious’ or insecure and don’t pay as well (or offer the same security) as a full-time, permanent job.

There are good reasons why not all beneficiaries should get a job right now: health problems, disabilities and childcare responsibilities all present major barriers to work.

Making life hell on a benefit does not reduce poverty

Most people are on benefits only for a short time.

There is no evidence that cutting benefits reduces dependency.

An argument for back-to-work policies is that it is good for children to see their parents working but research has shown negative outcomes for older children when parents are pushed back to work.

It is poverty, not dependency that is the problem.

Economic growth alone does not solve poverty

Economic growth alone will not necessarily address poverty and inequality.

The gap between the rich and the poor is large and shows little sign of declining.

There are more people in poverty now than there were in the 1980s.

Income disparities between Māori, Pacific peoples and Pakeha remain high.

The rise in inequality in this country between the mid-80s to the late 90s was the biggest in the developed world. Three decades on, the legacies of tax cuts for the rich, benefit cuts for the poor and jobs lost to technology and globalisation are having an impact.

The most recent figures, from the Ministry of Social Development's 2016 Household Income Report, show the highest-earning 10 per cent of Kiwis used to make five to six times more than the lowest 10 per cent. Now, their income is 9 times higher.

The twin factors of low incomes and housing unaffordability mean more Kiwis are struggling.

A high level of inequality can mean the population is less socially connected. People begin to live very different lives. They lose that sense of other people's lives, they lose that sense of empathy for each other so trust declines. Society is less cohesive.

It also creates an uneven playing field; the children of less privileged parents are not as likely to succeed  

Child poverty is a reality in New Zealand and its costing us dearly.

As much as $10billion of public money is required every year to deal with the negative consequences of child poverty. Independent research has shown that three quarters of that cost is avoidable.

Children living in income poverty develop more pressing health needs. Children who are maltreated are more likely to have poor mental health into the future and also more likely to be involved in the justice system. This extra burden on the justice system alone costs $2billion every year.

No child should experience severe and persistent poverty, least of all in a land of relative abundance.

There is no simple solution to address the causes and consequences of child poverty -- solutions need to address a range of factors. Poverty is the result of a breakdown in a number of facets in a fragile ecosystem of community wellbeing.

The Children’s Commissioner notes a significant and durable reduction in child poverty is possible, but will take time and money. It requires political vision, courage and determination. Above all, it means making children our priority and making effective use of the best available evidence.

The first step is to adopt a strategic framework for addressing child poverty issues and ensuring accountability for outcomes; then


·       enact of legislation requiring the measurement of child poverty

·    set short-term and long-term poverty-reduction targets

·       establish various child poverty-reduction indicators

·       monitor and report on results.

http://www.occ.org.nz/assets/Uploads/EAG/Final-report/Summary-of-proposed-solutions-to-child-poverty.pdf