How Low-Paid Employees Avoid Poverty: An Analysis by Family Type and Household Structure

Abstract

The risk of poverty is very unevenly distributed in society. Some groups – unemployed people, lone parents, large families, people with disabilities, and some ethnic groups – have much higher poverty rates than average. Some events – losing a job, marital breakdown, having children – also put people at high risk of poverty. But being in a high-risk group does not necessarily mean you will be poor, nor does experiencing an event with a high poverty risk attached to it. Some people avoid poverty, despite being in high-risk groups or facing high-risk events. This article focuses on one such group – low-paid workers – and explores whether and how people in low-paid jobs are able to avoid poverty. We consider three main options – own wages and in particular working long hours, living with other people and sharing income, and state transfers through the tax and benefit system – and compare these across different family and household types. The results highlight the importance of household living arrangements in protecting low-waged individuals against poverty.