Saturday, 12 July 2014

What They Don't Tell You About 'Poverty' In The UK

Millions of public sector workers walked out on Thursday during a massive coordinated strike against what they are calling ‘poverty pay’. These are people with jobs and pensions complaining because they are only getting a 1% pay rise - they are not starving children in Africa. While I don't deny that times are hard for some people in the UK - using the word 'poverty' to describe their pay strikes me as being quite distasteful when you consider how relatively well off they are compared with the world's neediest, like these children in the picture below.


British public sector workers claiming to be stricken with poverty are a bit like people with migraines claiming they have brain tumours. But it is not entirely their fault - they have been given licence to make claims of poverty thanks to the ineffectual way our government defines it. This problem is exacerbated by the fact that according to a recent BBC bulletin, there are apparently "over 13 million people in the UK living in poverty", with the majority of them either working or coming from a working home.

What does it actually mean to be in poverty, and how has the government got it so wrong? To see how they have got it wrong, let's first see a definition of 'poverty' that gets it just about right. Here's a definition as an absolute measurement on a global scale: a person is in poverty if they are eating less food than is required to sustain the human body (approximately 2000–2500 calories per day). That's an efficient measure of poverty, because anybody in the world can have their well-being measured according to daily consumption of food (the same could be applied to access to clean drinking water).

Sadly, unlike the global definition I just described, the UK measurement of poverty is nothing like as efficient - it is actually pretty meaningless. Officially, the UK Child Poverty Act 2010 measures poverty as:

"Each household income that is below 60% of the median income"

Not only is it the case that, when translated into real terms, no one in this country is in absolute poverty compared with developing world poverty - it is also the case that making UK 'poverty' relative poverty based on having earnings below 60% of the median income is a meaningless statistic because you could literally double every single person's household income and still have exactly the same number of people in poverty in the UK. To tell us that poverty is on the increase in the UK we hear that:

"Studies show that in 2012, 33% of people in Britain were living below the poverty line. It has more than doubled since 1983, when the figure stood at 14%."

Alas, this tells us no such thing. All that means is that there were 14% of the population below the median line in 1983 and now there are 33%. This statistic misses the most important factor - it doesn't factor in absolute growth, and how each person's absolute situation is different to 30 years ago. In reality, there can be more people below the median in the present day, while their absolute wealth is still greater than it was in 1983. You could even reduce poverty by lowering the median, because that would bring lower earners closer to the median, even though in real terms their wages remained unchanged.

Furthermore, aside from the aforementioned absurdity that the government could double every single person's household income and still have exactly the same number of people in poverty - what's even more foolish about the median line definer is that the government could actually reduce poor people's poverty by taking some of their money as long as they took more money from those richer than them.

In evaluating their 'poverty' status the public sector workers are concentrating on their disposable income when they should be focusing on their overall consumption. If escaping poverty is about having the basic necessities in life - food, drink, housing, heating, education and health care, then household income is not an accurate measure of whether someone is in poverty. I know public sector managers who earn much more than the average public sector worker but whose disposable incomes are less than those earning an average wage. Are we to conclude that because some managers have only half as much disposable income as their co-workers that they are to be classified as being in poverty? Clearly not.

This is a good analogy for British people in general - most of the basic necessities obtained (either from earnings, government spending or government welfare) constitute consumption, not disposable income. It is easy to exaggerate the differences in the former by focusing on the differences in the latter - but this is absurd because it is the former that is the proper indicator of poverty. Until the government sorts its definition out, disgruntled workers will be only too willing to claim poverty for themselves, and these absurd incongruities will endure.

* Photo courtesy of townhall.com

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