Why setting a "living wage" can help reduce poverty, but can't do so on its own

What is it about?

A living wage is a very imperfect means of helping low income households become better off. This is because your hourly rate of pay is only one factor influencing if your income is too low - it also depends on how many hours you work and how many people you're supporting. But decent pay can make a contribution, alongside other measures including tax credits and other in-work benefits. This article shows how living wages can combine with other policies to raise incomes.

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Why is it important?

The growth of living wage movements creates a risk that their potential for tackling working poverty on their own is overstated, but conversely, there's a risk that they'll wrongly be seen as irrelevant to that purpose. In times of tight public budgets, not all the burden of raising low family incomes can fall on state support. The importance of this article is in countering the risk of polarised views about how addressing working poverty is the responsibility of either employers or the state, when in fact it is both.