Lives change – why policy needs to allow for that

A large body of research evidence now lays out quite how much people’s lives change, not just as they move through the life cycle, but also from year to year and month to month. But the policy debate around ‘welfare’ and the welfare state often revolves around the assumption that people separate into two unchanging groups – those who pay, and those who benefit – according to John Hills in his new book, Good Times, Bad Times: The welfare myth of them and us.

PM speaks with staff member Makeda Sanford about welfare reform
David Cameron speaks with Sainsbury worker Makeda Sanford about welfare reform. Photo credit: Number 10

We know – from our own lives and just about every novel and soap opera – that things change. We see this in large-scale surveys such as Understanding Society or government data on how long people stay on benefits, or from detailed small scale surveys that have tracked people’s income in detail across the year.

In the very short-term, people’s hours of work change – even more so now with Zero Hours Contracts – and overtime comes and goes; some people work only in term-time, with no pay in half terms and school holidays; most of those who start a Jobseeker’s Allowance claim stay on it for no longer than two months. That may be part of a cycle of ‘low pay and no pay’, but it is a long way from typical benefit recipients being permanently out of work.

From year to year things change too, as careers develop or come to an abrupt end and as families change. Over a decade, about a quarter of people stay in much the same part of the income distribution, and another quarter stay in much the same place but with one or two exceptional years. But things are much more complicated for the other half, with considerable movements up and down the income range.

Movement in and out of poverty

This means that we see considerable movement in and out of poverty, for instance, over time. This is good in making long-term poverty rarer, but also means that far more people are affected by it at some point over a number of years – for instance half of all children were in families that were poor at some point between 1998 and 2006.

And over the life cycle, of course, things change. At some points in our lives we may be getting more out of the welfare state than we are paying in – when in education, ill health, or after retirement – while at others we pay more in. But we all move through these life stages, meaning that we all have a stake in what are in reality the expensive parts of the welfare state – schools, health care and pensions and other pensioner benefits.

Policy might be easy to formulate if we lived in the unchanging, arid, world that is sometimes conjured up by the rhetoric of ‘them’ and ‘us’ – those who benefit and those who pay. But it is not like that.

When – and if – it is fully in operation, those running the new Universal Credit will have to cope with 1.6 million changes in circumstances every month, for instance. Those running means tests need to allow for the way their rules on cutting back support overlap with all the other parts of the system that impose means tests of different kinds at the same time, or even with a time delay affecting the same year’s money (such as universities running bursary programmes for poorer students).

In broad terms the kinds of fluctuation we see should give pause to thought for those who advocate, for instance, restrictions on the number of children in a family who should be supported by benefits on the grounds that people should trim their family sizes to what they can afford at that moment.

Rigid or random world?

Most people poor or out of work at any one moment were in work before, with children who arrived when they would have fitted into the approved category of ‘hard-working families’.

But at the same time, we don’t live in a random world, where a coin is tossed or dice thrown to determine where we end up next. In that case it might all come out in the wash with a little judicious borrowing, lending and insurance.

But we know that those who start with lower incomes in one year are more likely than others to be poor in a later year. Those who start with higher incomes are more likely to end up on high incomes. But it’s not rigid.

We see the same when we look at the relationship between children’s life chances and their parents’ circumstances. All the way through education and into work, those with better-off parents do better on average than those with less well-off ones.

In unequal countries such as the UK and the USA, approaching half of someone’s earnings in their 30s may be predictable from their parents. But half is not – averages are not destiny.

Policy-making – and political choices – are harder in a world that is neither rigid nor random. But the evidence suggests that it’s the one we live in.

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