Who Suffered Most in the Recession? A Cautionary Tale

Dorothy Watson, Bertrand Maître, Christopher T. Whelan, Helen Russell,

Irish Social Policy Association Research Conference

in association with the Social Research Association

Dublin, July 1 2016

Background It is often assumed that the disadvantaged ‘suffer most’ when

there is an economic shock

Is this true – or in what sense is it true when it comes to poverty

and economic stress?

Did the disadvantaged groups experience the greatest increase in

poverty and stress in the Great Recession ... In absolute terms (an absolute percentage increase)?

In relative terms (as a % of starting risk level)

Are people with a disadvantaged risk profile now a greater proportion of the

poor than they were pre-recession?

We examine the issue drawing on SILC data and on data from the

Growing up in Ireland Survey

Outline

Poverty trends

Deprivation by social risk group

Families before and after

Summary

Implications

Data & Measurement

Irish Survey on Income and Living Conditions (SILC, CSO, 2004-14)

3 main Poverty Measures:

A. Income poverty: in a household with

disposable income below 60% of median

(after adjusting for size and composition)

B. Basic Deprivation: unable to afford

2+ of 11 basic goods or services

(adequate food, clothing, heating,

replacing worn-out furniture, basic social activities)

C. Consistent Poverty: both income poor and deprived

A C B

Trends since 2004: Unemployment, Poverty, Deprivation and

Consistent poverty by Year (all age groups)

Unemployment

Income poverty

Basic deprivation

Consistent Poverty

0%2%4%6%8%

10%12%14%16%18%20%22%24%26%28%30%32%

2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014

Income poverty: Disposable equivalised income below 60% median

Basic deprivation: Cannot afford 2+ of 11 basic goods services

Basic Deprivation did a better job than income poverty of capturing the shock of the recession

Social risk groups, 2004 – 2013 - sizes

4%

9%

15%

36%

11%

6%

4%

17%

Lone parents

Working-age disabled adult (WD)

Other young adults (18-29)

Other working-age adults (30-65)

Other adults aged 66+

Child of lone parent

Child of WD

Other children

0% 5% 10% 15% 20% 25% 30% 35% 40%

More than one third of children are in vulnerable families

Social Risk and Trends in Basic Deprivation (up to 2012)

Lone parent

39%

Child of LP, 50%

Working-age disabled adult

(WD)

Child of WD

Other children Other adults 18-29

Other adults 30-65

Older adults 66+

0%

5%

10%

15%

20%

25%

30%

35%

40%

45%

50%

Boom (2006-7) Recession 1 (2008-9) Recession 2 (2010-12)

Which group had the biggest increase?

Answer depends on whether we focus on the absolute or relative increase.

Absolute = the percentage point increase in risk, e.g. 5% if risk goes from 15% to 20% (20-15=5)

Relative = the increase as % of starting value, e.g. 33% if risk goes from 15% to 20% ((20-15)/15=0.33)

A related question is how the social risk composition of the deprived group has changed, e.g. what % of the deprived are lone parents & their children?

Absolute Change in Deprivation Rate from Boom to Late Recession by Social Risk group (Percentage point increase, e.g. 20-15=5)

10% 11%

15% 22%

14% 16% 12% 2%

0%

5%

10%

15%

20%

25%

30%

35%

40%

45%

50%

Loneparent

Child of LP Working-age,

disabled(WD)

Child ofWD

Otherchild

Otheradults 18-

29

Otheradults 30-

65

Olderadults 66+

Boom Absolute change

Relative Change in Deprivation Rate from Boom to Late Recession by Social Risk group (Percentage point increase as % of base, e.g. (20-15)=5/15)

35% 39% 23% 22% 9% 9% 7% 9%

10% 11% 15% 22% 14% 16% 12% 2%

30% 27% 65%

102%

164% 174% 169%

25%

0%

20%

40%

60%

80%

100%

120%

140%

160%

180%

200%

0%

10%

20%

30%

40%

50%

60%

70%

80%

90%

100%

110%

120%

130%

140%

150%

160%

170%

Loneparent

Child of LP Working-age,

disabled(WD)

Child ofWD

Otherchild

Otheradults 18-

29

Otheradults 30-

65

Olderadults 66+

Boom Absolute change Relative change

Relative Change in Deprivation Rate from Boom to Late Recession by Social Risk group (increase as % of base, e.g. (20-15)/15 = 0.33)

30% 27%

65%

102%

164% 174% 169%

25%

0%

10%

20%

30%

40%

50%

60%

70%

80%

90%

100%

110%

120%

130%

140%

150%

160%

170%

180%

Loneparent

Child of LP Working-age,

disabled(WD)

Child ofWD

Otherchild

Otheradults 18-

29

Otheradults 30-

65

Olderadults 66+

Change in Social Risk Composition of those who are Deprived between Boom and Late Recession (% of Deprived)

29% 20%

23%

18%

11%

16%

11%

13%

18% 28%

7% 5%

0%

10%

20%

30%

40%

50%

60%

70%

80%

90%

100%

Boom (2006-7) Recession 2 (2010-12)

% o

f d

ep

rive

d

Older adults

Adults 30-65

Young adults

Other children

WD & children

Lone parents & children

Impact of the recession was quite general

Impact of the recession was not limited to the most vulnerable families (e.g. lone parents)

We also see this in the GUI data where we compare the economic stress experienced by families before the recession (when the GUI child was 9) and during the recession (when the child was 13)

Economic stress = difficulty in making ends meet

Increased for all family types

Since there are more couple than lone parent families, the increase in stress for this group meant that more of the stressed families in the recession were couple families

Over 7,000 families interviewed in 2007 and in 2011/12

Economic Stress (Families, GUI data)

22%, 50%

4%, 17% 6%, 33%

40%, 30%

18%, 27%

21%, 42%

-5%

0%

5%

10%

15%

20%

25%

30%

35%

40%

45%

50%

0.5 1 1.5 2 2.5 3 3.5

Pre-recession (Risk %, Composition %)

Recession (Risk %, Composition %)

Lone parent Couple, 1-2 children Couple, 3+ children

Summary

Trends – Impact of recession most visible in deprivation

income poverty affected by falling threshold.

Deprivation varies by age group and family type Highest for LP & their children, lowest for older adults.

Deprivation increased for all social risk groups Despite falling unemployment, deprivation remains high in 2014

Hardship became more general with the recession Increased for all groups

Relative increase (from smaller base) greater for those less affected in the boom

Because they were large groups, they accounted for a much bigger proportion of deprived/stressed families post-recession

Families experiencing hardship post-recession are more diverse

Implications

More of those who became deprived as a result of the recession came from relatively advantaged backgrounds

Disadvantaged groups also experienced a deterioration in circumstances

Arguably have fewer resources with which to cushion the loss

The more general profile of those experiencing deprivation and economic stress post-recession suggests policy response must be broader– housing, child care as well as income supports.

Thank you!