Low-to-middle income families across Britain have got older and sicker over the past three decades, but they are still more likely to be in work, new RF research finds

50 is the new 20 for the 13 million families that make up an older, modern-day low-to-middle income Britain, who are also more likely to suffer from poor health or a disability compared to three decades ago. But despite these headwinds, which have come to the fore since the pandemic, lower-income families are far more likely to be in work today than they were in the mid-1990s, according to new research published today (Wednesday) by the Resolution Foundation.

Unsung Britain – the launch paper for a major new 12-month project, with support from JPMorgan Chase – will examine how the economic circumstances of the 13 million working-age families in the bottom half of the income distribution have changed since the mid-1990s. This unsung group hold the key to the Government's central task of bringing about a return to broad-based rises in living standards across Britain.

New research to launch the project shows that low-to-middle income working-age families are, on average, older compared to 30 years ago (and even more so than society as a whole). Lower-income families are now almost as likely to be in their 50s as in their 20s (20 and 21 per cent respectively) – a big shift from the mid-1990s, when people in this group were around 60 per cent more likely to be in their 20s.

As well as being older, they are more likely to suffer from poor health or a disability. Three-in-ten (30 per cent) working-age adults in low-to-middle income families said they had a disability in 2022-23, up from less than two-in-ten (19 per cent) in the mid-1990s.

More lower-income families are caring for adults as a result. One-in-eight (12 per cent) people in a low-to-middle income family care for an ill, disabled or elderly adult, a trend that has risen over time (although changes in data sources prevent direct comparisons over time). The Foundation adds that lower-income families are significantly more likely to have adult caring responsibilities than higher-income families (12 per cent vs 8 per cent).

But while lower-income Britain has got older and sicker, a trend that has come to the fore in current policy debates about economic inactivity, the research finds that overall levels of worklessness have fallen over the past 30 years.

In fact, the share of low-to-middle income households that are workless has almost halved since the mid-1990s (from 24 per cent in 1996-97 to 13 per cent in 2022-23).

This fall in worklessness has been driven by rising employment, particularly among women. Employment rates among mothers in low-to-middle income families have increased most sharply – from 46 per cent in 1996-97 to 58 per cent by 2022-23.

The Foundation notes that the combination of demographic, health and cultural trends means that people in low-to-middle income families are now over three times more likely to be economically inactive due to ill-health (13 per cent) than because they are looking after children (4 per cent). This is a significant change from 1994-95, when the rates were the same (11 per cent).

The report notes that the economic tailwind of rising employment has been offset by the major headwind of rising housing costs facing low-to-middle income families. The fall in home-ownership in this group – declining from a peak of 40 per cent in 2000-01 to around 30 per cent in 2022-23 – coupled with a lack of social housing, has pushed a record share of poorer families into the high-cost private-rented sector.

These high housing costs, coupled with a slowdown in wage growth, have contributed to a worrying long-term living-standards stagnation across the poorer half of Britain.

The report notes that between 1994-95 and 2004-05, the typical non-pensioner low-to-middle income real household disposable income grew by almost 50 per cent. But in the two decades since the mid-2000s, growth has tailed off – incomes have grown by just 10 per cent for the typical low-to-middle income family, and by just 7 per cent for the tenth percentile of the income distribution.

Mike Brewer, Interim Chief Executive of the Resolution Foundation, said:

“The 13 million low-to-middle income families across Britain today are older and sicker than a generation ago. But, although these trends have come to the fore in recent years as long-term sickness has hit record levels, a longer-term view shows that worklessness is a far smaller problem than it used to be. That's mainly due to the major strides Britain has taken in terms of parental employment.

“As low-to-middle income Britain has changed, so too have the policy challenges they face. We should learn the lessons of how a new policy settlement has boosted parental employment over time, as we look to new challenges like ill-health and disability. We also need to focus more on problems like the high-cost, low-security rented properties that so many more families live in.

“Lower-income families got 50 per cent richer over the decade that straddled the millennium. But their incomes have grown by just 10 per cent in the two decades since the mid-2000s. This highlights the scale of the challenges confronting the new Government as it seeks to deliver broad-based improvements to families' living standards.”