Poverty is not restricted to the unemployed, study says

Taub Center study: 14% of Israelis are "working poor"; "people protesting about housing prices are not same people below poverty line."

July 24, 2011 16:34
3 minute read.
A homeless man lies on a sidewalk

poverty homeless dirty 311. (photo credit: Marc Israel Sellem)


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Contrary to popular wisdom, poverty is not only restricted to those with no income. As social conditions deteriorate and the cost of living grows, it is also affecting an increasing number of employed people, a new report to be published in the coming days by the Jerusalem-based Taub Center for Social Policy Studies in Israel has revealed.

The report, which shows that the number of working poor in Israel has risen substantially – from 7.6 percent of the population in 1995 to nearly 14% today – comes amid nationwide social protests against the rising cost of living and the lack of affordable housing throughout the country.

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On Saturday night, thousands of people took to the streets of Tel Aviv to protest these worsening social conditions.

The rally came after a week of protests over housing prices, with young people and students setting up “tent cities” in most of the country’s major urban locations.

According to the Taub Center’s State of the Nation Report 2010, increasing poverty in Israel is not only restricted to students who cannot afford exorbitant housing prices in Tel Aviv, but extends to thousands of families where the head of household is gainfully employed.

Overall, the study found that in 58% of poor households the head of the family is working, but the family still remains below the poverty line.

“The people who have been protesting in the last week about housing prices are not the same people that are living below the poverty line, but it is still all a direct result of the policies of a state that does not help its own citizens,” commented Professor Haya Stier, chairwoman of the Taub Center’s Social Welfare Policy Program, who authored the report’s section on the working poor.

Stier explained that the government’s policy in recent years has been to “encourage poor people to work rather than to live off of public welfare.”

“The primary objective of this policy was to help people escape poverty, but in many cases it merely shifted families from the unemployed poor to the working poor, without much change in their standard of living,” she said.

Stier added that inducements to get people out to work “may have involved too much “stick” (reduction of benefits) and too little “carrot” (improving the compensation from work); and as a result, such programs may have saved money for the Treasury without making a major impact on poverty levels.

Information provided by the Taub Center shows that the poverty rate in Israel – in terms of net incomes (after taxes and welfare payments) – is one of the highest in the developed world. And its rates of working poor – 13.4% of all working families – are almost twice as much as the average among other countries belonging to the Organization for Economic Cooperation and Development (OECD).

Drawing primarily on government data, the Taub report shows that poverty rates overall have risen considerably in the past decade, with 18.5% of households in Israel considered poor in 2009, compared to 13.4% in 1995. Poverty in Israel is defined by having a household income of less than half the national median household income, adjusted for family size.

“It is easy to see that families without any earners are very vulnerable to poverty, but families with wage earners can also find themselves below the poverty line, if earnings are low, or if there are many household members,” pointed out Stier, who also noted that the rise in working poor is concentrated among Arab- Israelis.

“While the rate of working poor among Jewish- Israelis remained relatively low and has risen only slightly in terms of percentage points since 1995, general poverty rates and the share of working poor among Arab-Israelis have doubled, and are now around 50% and 40% respectively, compared to 28% and 21% in 1995,” she said.

Headed by Professor Dan Ben-David, the The Taub Center for Social Policy Studies in Israel is an independent, non-partisan institution for socioeconomic research based in Jerusalem. The Center provides decision-makers, as well as the public in general, with a big-picture perspective on economic and social areas.

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