Four Corners on the working poor

The Four Corners programme on The Working Poor was full of misconceptions and misleading implications. The confusion in public discussion of poverty à la Poverty Line can be pulled into conceptual coherence if a few anchor facts are borne in mind. Basically, as no one in Australia can have less than a welfare income, the Working Poor are employed people whose incomes after tax are no better than those of people entirely dependent on welfare.

1. Income distribution data over the last two decades show peaks of incidence for single person units at about the level of the welfare income of a single person, and for a family with dependent children at about the level of welfare income for a family with dependent children. This is, of course, largely because we have so many people dependent on welfare.
2. The Poverty Lines for these two major household categories across the same period more or less coincide with these peaks. This coincidence is a function of the manner in which the Poverty Line is calculated and of our welfare payment structure, and is more or less independent of the actual value of welfare income. Raising pensions and benefits does not essentially disturb the relationship.
3. Because Poverty Lines and welfare incomes are more or less coincident, those on welfare are also those at or below the Poverty Line, and therefore, as the numbers dependent on welfare have risen, so have the numbers "living in poverty".
4. The lowest full-time earnings (minimum wages), after tax, deliver incomes well above the Poverty Line for a single person (a person without dependents). Therefore, full-time workers without dependents are not among the Working Poor.
5. As a result of the introduction of targeting of family income protection (family allowances and tax rebates) in the early 1980s, a substantial percentage of working families, those earning up to about average weekly earnings (AWE), with two to three children, have their incomes reduced by taxation to the same value as the incomes of similar families supported by welfare. Therefore these families, too, are at or below the Poverty Line, and have swollen the numbers "living in poverty" since the late 1980s. They are the Working Poor.
6. While gaining employment will take single people (without dependents) out of "poverty", it will do little or nothing for families unless they are able to earn substantially above AWE. Their earnings will simply substitute for welfare money.
7. The problem for working families with children is not that wages are too low, but that taxes are too high. For working single people (without dependents) there is no problem.

Whether a welfare-level income represents real poverty (inability to provide housing, clothing and food adequate for health and happiness) is a vexed question. Certainly on the evidence of the interviewees of the Four Corners programme, this would not seem to be the case. The Welfare Left’s preferred definition of poverty as relative (providing a lifestyle substantially lower than that of most of the rest of the population) is now clearly hoist by its own petard, as the poor defined by the Poverty Line are now so substantial a proportion of the population as to be mainstream.

The first of the interviewees, a charming, capable, contented and coping working mother is probably rightly categorised as Working Poor, but the commentary was misleading in suggesting that her earnings of $410 a week were her entire income. She would be receiving almost twice that with Family Payments added.

The older single woman was clearly not Working Poor at all. Her income of about $400 a week is almost double the welfare income for a single person. It also appeared that she was probably not working full-time, as she mentioned five and a half hour shifts, which possibly meant a less than 30 hour week. The implication that wages on an hourly basis are inadequate clearly received no support from that quarter.

The circumstances of the working couple with children were less clear, as neither of their incomes was stated. If the father’s taxi-driving income was at least AWE and the mother was working full-time (which of course is not what one would wish for a mother of young children), then they were comfortably above the family Poverty Line or welfare income; but if he earned less and she was working part time, they could well have been in the category of the Working Poor, with taxes and Family Payments interacting to keep them at welfare income level. For average earning families there is a poverty trap from which they will not be released until targeting of Family Payments is abolished in favour of universality.

All these people were obviously able to live with self-respect and with reasonable access to the necessities and even the good things of life. They just had to be careful, curb their desires, and do without luxury overseas holidays. This, apparently, is appalling in the eyes of those inured to the academic lifestyle, the welfare professionals and clerics living it up with Roy and HG in their demonstration against poverty on North Sydney Oval (Raper’s homeless look-alike stubble doesn’t fool anyone). It is the normal condition of far more of society than they obviously begin to suspect. But it is not deep, foul, haunted-eyed poverty.