A new ESRI study finds that workers on low hourly pay are often found in households with incomes close to the average. More than 11 out of 12 low-paid workers live in households above the most commonly used poverty line. Analysis using SWITCH, the ESRI tax benefit model, finds that recent increases in the National Minimum Wage have mainly benefited individuals living in households in the middle of the household income distribution.
In a majority of cases, low paid employees are not the sole earners in the household. Even when low-paid workers are the sole earners, fewer than 1 in 5 of them fall below the EU’s “at risk of poverty” threshold. These findings reflect patterns which are common across countries and persistent over time.
Commenting on the report, Professor Tim Callan said “Minimum wage policies have several goals, but should not be expected to have a major impact on household poverty. Workers with low hourly pay are often found in households with incomes at or even above the average.”
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