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The Female Face of Low Pay

26/06/2015 17:39 BST | Updated 25/06/2016 10:59 BST

The bottom end of the labour market is more dynamic than you might think. That is, although a large number of people are in low pay, it isn't necessarily the same people at any point in time - people move in and out of low pay as their circumstances change.

The Office of National Statistics last year showed, for example, that pay broadly rises with age (and that successive generations earn more than their predecessors); a seminal piece of research by the Work Foundation showed that of those people in the bottom ten per cent of the pay distribution in 2001-2, around two thirds had 'escaped' seven years later.

So while it will always be right to ensure that people are supported when they need it, the fact that pay levels are not necessarily static prompts a further policy question - what are the characteristics of those who 'escape' low pay as compared to those that are 'stuck' and how can we ensure that the maximum number of people who start in low pay are able to progress out?

The Resolution Foundation developed a methodology to start exploring this question categorising people who started on low pay as either 'stuck', 'escapers' or 'cycling' in and out of low paid work a decade later. Using a definition of low pay as two-thirds of the median they found that three-quarters of those on low pay in 2002 were still there ten years later, but that of the remainder, being able to 'escape' was strongly associated with being male, switching out of a low pay sector, and working full time in continuous employment. The importance of changing jobs was emphasised by a similar analysis from the Centre for Economic and Social Inclusion that showed a strong association between leaving low pay (which they described as under the living wage threshold) and either shifting jobs or receiving training.

So what are the characteristics of those who remain? What, in a sense, is the 'face' of low pay in Britain? We looked at the wider family circumstances of people who were 'stuck' on pay rates of less than 20% above the minimum wage over a ten year period. The answer is that, with the exception of younger people, the face of low pay in Britain is female.

Out of all population groups, the ones most likely of being stuck in low pay are low-skilled women in their 40s and 50s working part-time possibly due to health considerations. Interestingly this group also says that they do not seek promotion or advancement - a key challenge for policymakers. At the other end of the age spectrum, women in their 20s to mid 30s with lower skills who left school at 16 and had children early and work in a low wage industry, possibly part time also have a higher than average chance of being stuck in low pay. Conversely, women of a similar background working part time in the public sector are more likely to escape, perhaps due to a stronger culture of annual pay increases compared to the low wage private sector.

There is an important debate currently raging about how to address low pay in Britain. The conclusions of this work throw some new issues into the arena. First, what is the contribution that lower paid sectors such as retail and care can make to improve the pay trajectories of their workforce? Should policymakers be more explicit about the fact that to increase pay it might be advisable to look for work elsewhere? In care, where there are good reasons to worry about standards of service, is it acceptable that pay is at the bottom of the national league? A crucial point that came out of our qualitative research was the frustration felt by individuals who wanted to do better but simply lacked the knowledge of how that might be possible.

Next, there is a real debate to be had around low-paid people who self-report that they are not ambitious even though they are in work and earning a wage. If people have opportunity but choose not to take it, that is one thing, and issues only arise to the extent that they are also being subsidised by the taxpayer. But if they are denied opportunity due to factors outside their control - discrimination, lack of flexible working, fear of new technologies and ways of working, then that would seem to be something that policymakers might want to explore.

Finally, there is work to be done to break the low pay trajectory of women who never properly get themselves into a situation to be able to work full time. This is about free pre-school childcare, and the ability to retrain while at the same time having an income and sorting out a family: issues which our benefits system has traditionally found it hard to grapple with.

But the main insight to come from this work is the obvious point that not all people on low pay are the same. It is the pay trajectory over time, rather than a snapshot view, that should be of particular interest to policymakers. For this we need better ways of describing the broader human face of low pay, rather than getting hung up on the number of people on a particular pay rate at a particular time.