The Benefits of Tackling Worklessness and Low Pay

This research, funded by the Joseph Rowntree Foundation, shows how increasing employment and wages can boost the economy, both locally and nationally. It uses Leeds and Leeds City Region as examples.

Key points

  • Tackling worklessness and low pay makes economic sense. It cuts the amount spent on welfare and tax credits, with indirect savings in other public service areas. It increases contributions to central government and boosts the amount of money spent in local economies, which increases wealth through a ripple effect.
  • Last year, for every out-of-work claimant that moved into a job that paid the Living Wage (then £7.45 per hour), the government gained, on average, almost £6,900. The local economy benefited, on average, by more than £14,000 per year every time an unemployed person began a Living Wage job.
  • However, gains to government vary by locality, due to a combination of local wage levels, housing costs and the types of benefits claimed. This raises important questions about the incentives for tacking worklessness and low pay. Successful, innovative city-level poverty reduction strategies could be rewarded by local areas retaining some of the savings.