Working but Poor? Low Pay and Poverty in Australia

Abstract

AbstractThe decentralisation of wage bargaining in Australia has led to a widening of the earnings gap. There has been talk of a new phenomenon of ‘working poverty’, where incomes in a significant number of households fall below the poverty line even when family members are in paid employment. This paper examines the growth of working poverty in Australia from the beginning of the 1980s to the mid-1990s. The analysis suggests that the phenomenon of working poverty is real and has been growing. 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 considerably. In the light of these findings the paper discusses the possible impact of policy approaches such as tax credits and higher minimum wages.