Single mothers and lowest paid hit hardest by loss of income in Covid-19 crisis

New data released today by the Institute for Social and Economic Research at the University of Essex from Understanding Society: the UK Household Longitudinal Study shows that earnings have fallen for households across the UK, but particularly for the lowest earners, and with severe losses for single parents.

In the highest income bracket, average earnings in February stood at £832 a week, and fell by £46 a week. In the lowest income bracket, they fell £43 a week, but from an average of £297. On average, single parents’ earnings fell by more than double the amount experienced by households with children and more than one adult1.

The new figures cover respondents aged between 20 and 65 taking part in a regular Understanding Society survey of the UK population’s experiences of the Covid-19 pandemic. The Covid-19 survey interviewed 17,450 respondents who are part of the established longitudinal study, which is representative of the UK population as a whole. The survey asked people about their circumstances in the last week of April, and what their circumstances had been in January and February.

The data show that nearly 18% of the lowest earners were behind on their household bills, compared to just 2% of those in the highest income bracket. The lowest earners were also over five times more likely to report that they had been hungry but not eaten at some time in the last week2.

The survey also explores what people are doing to mitigate the economic effects of the pandemic. Of those who reported a fall in earnings

• more than two thirds (68%) said they had reduced their spending

• more than a quarter (26%) have used savings

• significant numbers have taken a mortgage holiday (10%), borrowed from friends or family (10%) or applied for Universal Credit (7%).

This first look at the data was carried out by the team at Understanding Society.

Thomas Crossley, Associate Director for Scientific Content at Understanding Society says, “These new data show us that the economic shocks caused by the pandemic have affected people unevenly across the UK. The interviews will be repeated throughout the coming year with the same people to see how their experiences change, with new data publicly released after each wave to allow government and researchers to understand the pandemic’s long-term effects on people’s lives.

“We know from this first look at the data that twice as many people expect their financial situation to get worse as those who expect it to get better. This rises to three times as many in the lowest income bracket, and among single parents.3 So it is crucial to continue to track developments.”

Michaela Benzeval, the Director of Understanding Society, added, “Thanks to the ESRC’s long-term investment in Understanding Society, we have rich background information on these respondents from past annual waves of the Study. It will also be possible to track the long run impacts of the Covid-19 pandemic with their future regular annual interviews.”

Joe Richardson, Research and Policy Officer at Gingerbread said: ‘“It is no surprise that single parents have experienced the most severe financial losses as a result of COVID-19. Since the crisis took shape, Gingerbread has warned about the impact of the ‘triple penalty’ which single parents have been hit with through being furloughed, facing increased costs due to children not attending school or nursery and having their maintenance payments reduced or withdrawn.

Prior to COVID-19, almost half of single parents were in poverty. The pandemic has meant many of these families have faced indescribable hardships on a day-to-day basis during. It is not uncommon for single parents to have to choose between feeding themselves or feeding their children – it really is that stark.

Urgent action is needed to lift this group out of persistent poverty. Single parents on legacy benefits and those impacted by the benefit cap have not seen the £20 increase to Universal Credit. At Gingerbread we are calling for the benefit cap to be suspended, for legacy benefits to be increased in line with universal credit, a £10 increase each week to child benefit. Additionally, the government must step in to temporarily fill the shortfall for those not receiving maintenance payments.”

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Notes to editors

1. Average weekly household earnings for individuals who are a single adult with children fell £73 from £326 in February to £253 in April, compared to a drop of £36 (from £511 to £475) for individuals living in a household with more than one adult and children. For individuals with positive household earnings in February, single parents saw an average drop of £119 (from £427 to £308), compared to £43 (£537 to £494) for individuals in a household with more than one adult and children.

31% of the lowest earners said their earnings had fallen by a fifth (20%) or more, compared to 21% of the highest earners. 35% of single parents said their earnings had fallen by a fifth (20%) or more, compared to 21% of households with children and more than one adult. Average household earnings fell by 8%.

1. 7.7% of those in the lowest income quintile reported that they or someone in their household had been hungry in the last week but did not eat, compared to 1.5% of the highest income quintile.

2. Overall, 20% of people expected to be worse off in the next month, compared to 9% who expected to be better off. (71% of people expected to be in the same financial situation.) In the lowest income quintile, 24% expected to be worse off next month, compared to 8% who expected to be better off. Among single parents, 26% expected to be worse off next month, compared to 7% who expected to be better off.

3. Other headline figures from the first month of the Understanding Society Covid-19 survey include:

• The number of hours people worked fell significantly, from an average of 35 hours a week in February to 23 hours a week in April. Of those reporting a drop in the number of hours they worked:
• 43% had been furloughed
• 14% experienced a drop in self-employed work
• 10% said their employer had reduced their hours
• 7% said it was because they were caring for others, but this figure was twice as high for those aged 30-49
• The fall in the average number of hours worked was particularly large for people without degrees, people on zero hours contracts, and the self-employed.
• People have taken a variety of actions to mitigate a loss in earnings. Of those who reported their earnings falling:
• Two thirds reported that they have reduced their spending
• More than a quarter have drawn on their savings
• Significant numbers have taken a mortgage holiday (10%), received money from friends or family (10%) and applied for Universal Credit (7%)

1. This first look at the data was carried out by three members of Understanding Society’s Scientific Leadership Group who led the design of the economics section of the new Covid-19 survey. Thomas Crossley is Professor of Economics at the European University Institute and an Associate Director of Understanding Society. Paul Fisher is a Research Fellow at the University of Essex and Understanding Society’s Topic Champion for Income. Hamish Low is the James Meade Professor of Economics at the University of Oxford and Understanding Society’s Topic Champion for Economic Risk.

2. The Understanding Society Covid-19 study is a monthly survey on the experiences and reactions of the UK population to the Covid-19 pandemic, funded by the Economic and Social Research Council (ESRC) and the Health Foundation. The first wave was carried out online between 24 and 30 April. All Understanding Society adult sample members aged 16+ were invited to participate, and 17,452 completed the survey in the first wave. There were over 10,800 respondents aged between 20 and 65, whose data fed into the figures in this press release. ESRC is part of UK Research and Innovation. The Health Foundation is an independent charity committed to bringing about better health and health care for people in the UK.

3. The questionnaire covers household composition, coronavirus illness, long-term health conditions, caring, loneliness, employment, finance, financial security, time use, home schooling, food, alcohol consumption, smoking, exercise, and mental health. Researchers have been invited to submit questions for future waves of the survey. The Covid-19 survey data is available to researchers via the UK Data Service.

4. Understanding Society is the UK Household Longitudinal Study. It follows tens of thousands of households across the UK through yearly interviews that focus on social, economic, and health topics. The Study is based at the Institute for Social and Economic Research at the University of Essex. www.understandingsociety.ac.uk

Read the briefing paper