It would take 137 years for lower-income families in the UK to see their living standards double at the current rate of growth, according to the Resolution Foundation thinktank. The analysis highlights a two-decade stagnation in disposable incomes, creating a 'mood of unease' across the country and warning of the risk of 'further political disruption' unless pay growth accelerates.
In the 40 years to 2005, the typical disposable income of working-age families in the poorest half of the population doubled, growing by 1.8% a year on average after inflation. In the final decade of that period, growth reached 4% a year, suggesting a doubling within 18 years. However, since 2005, growth has slowed significantly to just 0.5% for lower-income families, measured after taxes and housing costs.
The thinktank defines lower-income families as working-age households with disposable incomes below the national median and no one above state pension age. This group of 13 million families, described as 'unsung Britain', has seen increased workforce participation and unpaid care for disabled adults, but these efforts have not been rewarded with higher incomes or living standards.
Ruth Curtice, chief executive of the Resolution Foundation, said the figures show that work is 'not a guaranteed route out of poverty'. She added that these families are 'widely courted by politicians' but have seen disposable incomes stagnate due to shrinking pay rises, higher costs, and growing health and care needs. The thinktank attributes the slowdown to pay rises drying up, with average gross annual earnings for someone in a lower-income family rising by £7,700 since the mid-1990s to £18,000 today, but nearly three-quarters of that increase occurred before 2005. Steep cuts to working-age benefits have also eroded living standards.
Almost one in three working-age adults in lower-income families have a disability, compared with fewer than one in five 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, taxes account for a far smaller share of poorer households' budgets (12% compared with 31% for better-off families), with council tax being a notable exception: the poorest households spend four times as much as a share of their income on this tax as the richest.
