Lone parents on the margins of work
A hard copy of this report summary can be obtained by contacting Paul Noakes [E-Mail: Paul.Noakes@dwp.gsi.gov.uk] or by writing to him at the 'Social Research Division, Department for Work and Pensions, 4th Floor, Adelphi, 1-11 John Adam Street, London WC2N 6HT'.
Research Report No. 80
By Louise Finlayson and Alan Marsh
This report presents data from a 1994 survey of a nationally representative sample of lone parent families conducted by the Policy Studies Institute as part of the Programme of Research into Low Income Families (PRILIF). The analysis looks at the extent to which out of work lone parents are ready to enter paid employment and the processes associated with preparing to work. The main findings are:
- In 1991, on average, lone parents in-work and receiving Family Credit had incomes £30 above their corresponding incomes out-of-work, before travel and child care costs. This difference had increased to £44 in 1994. Taking into account post-1994 changes, the child care disregard and the over 30 hours bonus, it is estimated that the average additional income by 1996 would be £50.
- If lone parents have access to all three main sources of in-work income -earnings, benefits and maintenance payments - they exceed the incomes of similar families who are out-of-work and on Income Support by 60% (excluding housing costs and before travel to work and child care costs).
- Out of every ten lone parents surveyed:
- three worked at least 16 hours per week;
- three were ready to work, at least one of them actively;
- three will seek work one day but not yet; and
- one would never work, mostly due to poor health, though a few were well-off.
- The wages lone parents said they would realistically settle for in a new job were low, averaging £132 a week among all lone parents. Those who were ready to work looked for only £107 a week, about £3.25 an hour.
- Lone parents seeking work expected to work 34 hours a week, three more than the average actually worked by lone parents. Three quarters expected to receive Family Credit, half expected to claim when starting work.
- Overall, lone parents who have the familiar markers of disadvantage - being younger and never married, poorly qualified, social tenants on income-tested benefits - will more than likely suffer from low self-esteem and low morale. It is these mothers in particular who will find the most difficulty in returning to paid employment, and accordingly see their weak position in the labour market get weaker.
Introduction
This is the second report that presents findings from a nationally representative survey of 880 British lone parents carried out in 1994. This survey forms part of the Department of Social Security (DSS)/Policy Studies Institute (PSI) Programme of Research into Low Income Families (PRILIF). Previous PRILIF research has shown that changes in the benefit regime (particularly Family Credit, Housing Benefit and Council Tax Benefit) at quite small weekly hours of work, have brought large numbers of lone parents into paid work and kept them there. This study concentrates more on the subjective and behavioural aspects of motivation and ability to work and of what happens when lone parents try to find work.
Work and benefits
Despite an apparent rise between 1991 and 1993, the estimated proportion of lone parents working 'full-time' of 16 or more hours per week, fell back to less than three out of ten by 1994. Among these, however, increasing numbers had migrated into the new 16-23 hours slot. There was good evidence that at least a third of those working 16-23 hours a week had been recruited from Income Support.
Over the three survey years (1991, 1993 and 1994), fewer of the single, never-married mothers worked full-time, down from 16% to 11%, while those working part-time rose from 8% to 13% - three-quarters remained economically inactive. A similar pattern was seen among those separated from cohabitation, with two-thirds of them consistently out of work. Employment rates among divorced lone parents remain unchanged and substantially higher.
The key factor in assisting the less well qualified lone parents off long term reliance on Income Support and into shorter hours working, was the availability of Family Credit. Between 1991 and 1994, 28% of lone parents had some experience of Family Credit. Most of these remained current recipients (16% overall). One in ten current claimants, however, no longer had their jobs and now drew Income Support. Half of these newly unemployed Family Credit claimants had only been temporarily employed or had been made redundant; the rest of them found combining work and family life too difficult.
Half of lone parents working more than 16 hours per week received Family Credit, up from a third in 1991. Recipients still made up a third of those working above 24 hours, but three-quarters of those working 16 to 23 hours, who by 1994 slightly outnumbered recipients working longer hours.
How large is the incentive?
The first PSI survey in 1991 found that lone parents receiving Family Credit would be about £30 a week worse off in total income (before travel to work and child care costs) if they were to lose their jobs and claim Income Support instead. With the introduction of lower qualifying hours and the £15 maintenance disregard, the difference between in-work and out of work incomes rose from £30 in 1991 to £44 in 1994. The adjusted difference, deducting the cost of travel and the (apparently increased) costs of child care, is £34 in 1994 compared with £22 in 1991. Taking into account post-1994 changes, the child care disregard and the over 30 hours bonus, it is estimated that the average additional income by 1996 would be £50.
The change in income tested benefits decreased from about £110 on Income Support, Housing Benefit and Council Tax Benefit, to about £60 on Family Credit, Housing Benefit and Council Tax Benefit. Having a lone parent in work and on Family Credit instead of being out of work and claiming Income Support almost halves the total benefit bill.
Putting aside housing costs and controlling for the size of the families, working lone parents claiming Family Credit, who also received maintenance payments disregarded against their assessable income, were 60% better off compared to those who depended solely on Income Support. This is before travel to work and child care costs.
On average, those paying for child care - about a fifth of lone parents receiving Family Credit - did not make a loss, though they came uncomfortably close to doing so. They cleared £10 above their out-of-work incomes. If they were out of work and managed to earn the £15 a week disregard from Income Support without incurring child care costs, they would actually have been £5 a week better off. The majority who paid nothing for child care, in contrast, cleared almost £40 a week above their out-of-work income even after travel costs (in 1994).
The effect of the post-1994 policy changes is equivalent to £18.34 for those paying for child care at 1996 values. For those not paying for child care the revised net gain is £44.40.
Preparing for work: is it worth working?
Out of every ten lone parents:
- three worked at least 16 hours per week;
- three were ready to work, at least one of them actively;
- three will seek work one day but not yet;
- one believed she would never work; mostly due to poor health, though a few were well-off.
Overall, lone parents had low reservation wages (the amount they would settle for in a new job) averaging £132 a week. Although there was variation in this: some lone parents would not accept a job paying less than £165 a week, while others were prepared to abandon their target wage (averaging in their cases £172) and settle for much less, £110 a week.
On average, those providing a reservation wage said they would expect to work 34 hours a week, three more than the average hours actually worked by lone parents. All but 7% of those working more than 24 hours a week wanted to continue in those hours, while those working 16 to 23 hours divided equally between those wanting to continue and those wanting to work longer hours. Out of work lone parents looked on average for 23 hours per week and only about a fifth of them wanted to work between 16 and 23 hours.
On average lone parents on Family Credit worked 25 hours a week. It seems that lone parents look for what they imagine is full-time work but many are offered shorter hours which, combined with Family Credit, they take. It is possible therefore, that the advantages of reduced hours combined with Family Credit, is something that lone parents discover as they enter work, rather than beginning their search for work with such a plan in mind. This suggests they may be receptive to early advice which may make their job search more efficient and focused.
In contrast to their relatively modest wage expectations, lone parents had very high estimates of their 'reservation job-security'. Almost none were interested in casual work of more than 16 hours a week.
It is now apparent that Family Credit is as much a part of lone parents' working lives and as prominent as other welfare payments such as Child Benefit. Those of the minority who thought they would not get Family Credit tended to be those few out-of-work lone parents who received large amounts of maintenance.
Getting into work
14% of all the out of work lone parents in the sample said that they were actively seeking work at the time of their interview. A further 8% said that they had looked for work during the past 12 months but had paused in their jobsearch.
If there is a single generalisation that characterises policy towards lone parents and work it is 'income packaging'. Lone parents can juggle up to eight sources of income: earnings and maintenance (private); four income-tested benefits (IS/FC; HB and CTB); and two contingent but not income-tested (OPB and Child Benefit).
Entry level jobs for lone parents almost always involved multiple-source income packaging:
- nearly half in work received Family Credit;
- at entry hours of 16-23 hours a week, the majority claimed Family Credit;
- those working shorter hours and not claiming Family Credit tended to rely on maintenance payments;
- nearly all out of work lone parents who were considering work had reservation wages that would leave them well within range for Family Credit;
- nearly all of them said they included Family Credit in their plans anyway, except the few who believed they could rely on maintenance payments;
- even if they believed otherwise, the occupational, educational and skills profile of the majority of out of work lone parents suggested that their market position was not strong enough to carry them beyond the threshold of a supplemented wage on taking an entry level job.
This research underscores the need for fast-track procedures for all employed claimants which were introduced in July 1996. More than anything, these findings emphasise the likely effectiveness of the four week continuation of Housing Benefit. From these data it seems possible to infer that those lone parents who were hovering close to the labour market but who were not actually in work, were also those most likely to have had some transitional difficulties entering work on Family Credit in the past and then trying but failing to stay in employment.
Lone parents were optimistic about their prospects in the labour market. In two years time, sixty-two per cent said they expected to be working at least 16 hours a week and 59% of these said they also expected to be claiming Family Credit. Thus a third of all lone parents expected to be working and claiming Family Credit within two years, but these expectations varied widely according to present orientation to the labour market.
Only a quarter of those who said they were not yet ready to work imagined themselves having gained entry to work even in two years time. But those who did had no doubts at all about Family Credit since almost all of them expected to claim.
Those with educational qualifications were the more optimistic about their job prospects. But among all those expecting to enter or continue to work, even a third of the better qualified thought they would claim Family Credit. The figure rose to two-thirds with those with GCSE/'O' level qualifications and to more than eight in ten of those without qualifications expecting to continue or enter work.
What lone parents can offer: experience, qualifications and skills
Thirteen per cent of working lone parents were employed in the least skilled grades, while four out of ten of those not yet ready to contemplate a return to paid work reported previous employment in these grades. At the other end of the scale, 65% of working lone parents had non-manual clerical or professional jobs while only three in ten of those out of work could cite similar experience in the past.
It seems a paradox then, that lone parents should face an apparent recruitment barrier to areas of work that require no entry qualifications at all. But the hours lone parents needed to work to raise earnings up to the point they attract the largest supplement, prior to the onset of the withdrawal rate, will often be too many.
Looking at educational qualifications, lone parents tended to divide into four clear groups:
- those who had none at all (41%);
- those who had basic GCSE, 'O' level or some equivalent vocational qualification, typically City and Guilds (42%); and
- remainder (17%) who divided between those who had:
- 'A' levels or their equivalent (6%); and
- degrees or their equivalent (11%).
One additional qualification that has been shown to be important is the possession of a valid driving licence. From this finding we cannot assume that getting more out-of-work lone parents a driving licence will get them a job, but it would clearly not do their chances any harm.
Just over half of all lone parents said that they had no experience of training courses. About a third of all lone parents (36%) said that they had completed such courses ranging from nearly half those working more than 15 hours a week (46%), a third of those 'ready to work' (35%) and just over a quarter of those not yet ready to seek work (27%).
Overall, lone parents were not generous to themselves in rating their skills. Only in the most general way did the majority feel they were good at anything at all and even this left a third who thought they neither spoke nor wrote clearly. Quite a large majority conceded that they were at least 'fair' in the proper use of tools and most thought they were at least 'fair' in nurturing tasks, such as caring for other peoples' children or people who require care. Only a fifth thought they had any basic computer or keyboard skills and the use of computers to solve problems remained beyond most. A majority denied having any skills in selling products or services, somewhat surprisingly, since retail experience was relatively commonplace among those with work experience.
Working lone parents were twice as likely to score 'high' on the office skills scale than work-ready lone parents and four times as likely as other non-employed lone parents. In contrast, out of work lone parents claimed as great a skill in tool-use compared with those who had jobs. This again hints that, paradoxically, the greater barrier to job entry may lie in manual grades. Rates of pay per hour are likely to be so low as to unravel an in-work income packaging strategy that relies on short working hours.
The data seem consistent with the GAIN conclusions: among lone parents, skills tend to follow jobs, more often than training leads to employment.
The morale of lone parents
Only 17% of lone parents felt able to say they were very happy. Two-thirds of lone parents said they were just fairly happy while 16% were not very happy or not at all happy. About three-quarters of all respondents said that they usually had free choice and control over life (73%) and that they could usually run their life more or less as they wanted (77%).
A significant minority of lone parents usually found life's problems too much for them (23%) and a slightly larger proportion were fatalistic, believing that whatever they did had no real effect on what happened to them (27%). Overall, three-quarters of lone parents were satisfied with themselves but, at times, half of them felt they were useless. Nearly a fifth felt they were a failure.
By measuring the dimensions of happiness, efficacy and self-esteem, a scale to measure what is termed as the 'relative morale' of lone parents was constructed. Younger lone parents tended to report lower levels of morale compared with older respondents: 59% of the 20-25 year olds scored 'low' on the morale compared with 34% of those over 40. Those separated from a marriage had lower morale than divorcees. A greater proportion of lone parents who reported a long-standing illness or disability were found to have low morale (61%) compared to those in good health (42%).
There was a sharp distinction between private and social tenancy: a third of lone parents who were renting privately reported the lowest levels of morale compared with as many as six out of ten council renters. Poorly qualified lone parents had lower morale, both in and out of work, relative to better educated lone parents. Those with higher skills had higher relative morale, those in work had higher relative morale than those not in work even if the former had lower skill levels.
The relationship between relative material hardship and relative morale was quite striking. Seventy per cent of those classed as in severe hardship had low morale, compared with 39% of those with two or fewer problems. Of those currently receiving Income Support, 57% had low morale compared with 30% of lone parents not on Income Support. Morale tended to decrease the longer the time spent on Income Support in the current spell, until curiously, eight years or more when there was a slight rise in morale.
Lone parents less attached to the labour market had lower morale than those on the margins: 36% of them scored the lowest point on the relative morale scale compared with 24% of those currently seeking work and just 11% of those in full-time work.
Overall, lone parents who have familiar markers of disadvantage - being younger and never married, poorly qualified, social tenants on income-tested benefits - will more than likely suffer from low self-esteem and low morale. It is these mothers in particular who will find the most difficulty in returning to paid employment.
Relevant publications
Marsh A and McKay S (1993) “Families, Work and Benefits”, London: Policy Studies Institute.
McKay S and Marsh A (1994) “Lone Parents and Work”, (Department of Social Security Research Report No. 25), London: HMSO
McKay S and Marsh A (1995) “Why Didn't They Claim?”, London: Policy Studies Institute.
Ford R, Marsh A and McKay S (1995) “Changes in Lone Parenthood,” (Department of Social Security Research Report No. 40), London: HMSO
Bryson A and Marsh A (1996) “Leaving Family Credit,” (Department of Social Security Research Report No. 48), London: HMSO
Ford R (1996) “Childcare in the Balance”, London: Policy Studies Institute.
Marsh A, Ford R and Finlayson L (1997) “Lone Parents, Work and Benefits”, (Department of Social Security Research Report No. 61), London: TSO.
Ford R, Marsh A and Finlayson L (1998) “What Happens to lone parents?,” (Department of Social Security Research Report No. 77), London: TSO.
Payne J and Range M (1998) “Lone Parents' Lives”, (Department of Social Security Research Report No. 78), London: TSO.