Working but Poor? Low Pay and Poverty in Australia

Abstract

There has been talk of a new phenomenon of 'working poverty' in Australia, whereby the levels and concentration of low pay are combining to see incomes in a significant number of households fall below the poverty line even where family members are in paid employment. The links between individual low pay and family poverty, however, are complex. This paper uses Australian Bureau of Statistics survey data to examine the growth of working poverty in Australia from the beginning of the 1980s to the mid-1990s. The analysis shows that low pay on an hourly basis does not in itself equal poverty, and the biggest increase in family poverty has been among employees not in low pay. Yet the proportion of low-paid workers who are also in poor families has grown to about one in five. It is not only a question of part-time or casual work. Poverty amongst those in full-year, full-time work seems also to have risen significantly, with a particular increase amongst single person households. In the light of these findings, the paper discusses the policy implications, including the possible impact of recent calls for a freeze on minimum wages in order to stimulate employment growth.