to think that work should be worth it financially, and if not ....(76 Posts)
then do what's best for you family given the perversity of the system.
Please note, not interested in benefit bashing - this is a real situation that someone I know is in. I'm much more fortunate.
We were discussing their situation yesterday. Married couple, expecting in London. She's planning on being stopping FT work, and being a SAHM, but will work freelance, he's got a full time job earning 50k.
Where they live, living on the one salary will be tight, but doable. It'll return about 35k per year after tax plus they will get Child benefit for the child of £20 per week. Rent alone will take around 40% of their annual income. They are fairly frugal people so can make it work.
However, we were discussing the entitled to site, which I suggested they had a look at. The calculator is fascinating so I thought I'd have a go. Turns out that if he reduces his hours too (to 16 hrs per week - though he would have to take a salary reduction more than pro rata to around 14k) and she works 8 (say as a cleaner earning herself a couple of grand a year) - they will be no worse off....
Huh? I couldn't believe it either.
Well, that's the way it is. They would be entitled to Working tax credit, child tax credit, Housing benefit, Council tax credit and child benefits which bring them back up exactly to the 35k income. Plus there would be all the additional benefits like free prescriptions, free school meals etc when the time came.
Their life would be an awful lot better too - as they both would dearly love to spend time with their child rather than working all the hours that the job requires, and with that work schedule it really would be a nice life.
They are not seriously considering this - but in many ways I think it would be the better life. Is that ridiculous? I'm posting this from an ivory tower, but quite a liberal one......
Thanks Kirjava - it is good to know that there is indeed a practical example of my theory!
Yes PT jobs are difficult to get a good salary from - however not impossible.....I have one. Very good in fact (thanks to the universe). The luck of it is probably where my 'head in the clouds' style I think comes from!
But the benefits relating to DC are not forever. It stops when they are grown, before they are grown in the current climate continues. And what of pension? Lower hours lower pay lower pension. What of career advancement? Part timers are at a disadvantage, and in your scenario the woman gives up a career to take up menial, minimum wage labour! the pros of working are more than immediate financial gain. In fact, I think that we have a problem in this country where people cannot appreciate the value of delayed gratification People don't see the point of working because it is not immediately financially better and seem to disregard the future and the other benefits of working. This attitude does lead to a benefits culture somewhat.
Never trust an online benefit calculator. It is an average estimate but hardly true to figures. Most People who claim WT with a lower portion of CT do not get free prescriptions or free school meals. Council Tax is now mostly never available and if it is it is a very low rate. All and many more things like the above which the online calculator does not actually calculate to true results can cause a lot of false view points.
Also remember it is all changing in October and under the new rules the more you work the better off you will be. (quite rightly) So even if they would "stay the same" now by cutting working hours they will be worse off for it come October.
You might as well enjoy your life.
It is not enjoyable to live off benefits. You don't know what the next change will be and that feeling of relying on the government and their whims is awful. Even when you have a wage coming in and the benefits are just a top up (like the scenario you are describing) all it takes is being asked to work overtime a couple of weeks to fuck everything up and change what you can claim etc and you spend ages sorting it out with everyone to make sure you aren't getting more than you are entitled to. And then rinse and repeat the week after. And the week after.
Anyway its all systems change when (if?) universal credit comes in. You'll have to earn a certain amount each week as a family unit and the amount increases when the children get older. I wouldn't reduce any hours with this all coming in!
You might as well enjoy your life.
See, I don't think I could enjoy my life without some form of meaningful work and financial independence. That especially is critical to me. I couldn't downshift to 8 hours a week and sleep at night to be honest. What if something happened to DP, or to our relationship? I freelance ATM and have a secret business plan which I could implement to scale a reasonably lucrative part-time job into a fully-fledged business within 6 months. I need to have that security blanket.
But in terms of your op, YANBU. It does seem bonkers that this 'sweet spot' exists. The trouble is in trying to eradicate it, the govt is cutting benefits left right and centre. It would be better I think to work on reducing housing costs (which completely drive the needs for high salaries) and making work more lucrative.
YABVU as "now" is just a snap shot in time. Kid's grow, careers grow if you have one. If you leave a career because you are not better off at the moment, you still need to take into account that not working isn't going to improve that any, whereas continuing most likely will long term - even if you have to work for £0 for a couple of years.
Benefits should be the last resort surely? Some people really NEED them, need MORE of them even. I hate the argument that you could work but it is not worth doing so because the state will prop you up to the equivalent level.
Enjoy your life? For me a benefit of working is independence, I was brought up to believe benefits are there as a safety net, and I would be embarrassed if I used them as anything but that. I couldn't enjoy my life when my income is based on government whim and handouts. I'm happy that my DC learn a work ethic from me. My DC may not have as much time with me, but the time we have as a family is well spent and appreciated. Working is a part of life, IMO, for all but the lucky few millionaires, and I'm not entirely sure that they are luckier than me for not working.
The thing is i expect he'll be paying into a pension which his company pay into - giving them hopefully a decent retirement. Also that scenario is fine as long as the benefits system remains the same........and I don't trust it to hence me trying (and so far failing) to get a full time job on a living wage.
It's also about the message he'll be giving the children as they grow up - my personal (and it is personal to me, other families, well that is their decision) view is that I want my dd to see me demonstrate a good work ethic.
It's all about how you view life, and if you are prepared to gamble on the benefit system, each to their own basically
It would be better I think to work on reducing housing costs (which completely drive the needs for high salaries) and making work more lucrative.
I couldn't agree more! If their housing costs were not so ludicrous, I wouldn't have even thought about it - so you found my catalyst.
Thanks to all for the considered responses and interesting perspectives.
Yes WTC are a pain if you work shifts and earn a different salary each month that you have to let them know about.
You have to underestimate your wages and get less WTC than you are entitled to or you risk getting (and having to pay back) an overpayment!
And you don't get much... tbh I have to live on a large overdraft, credit card and borrow money from my dad & sister (who are lovely) to make ends meet.
And I feel ashamed of having to rely on Benefits... the press calling us all ''scroungers'' doesn't help.
Knowing that I only get WTC due to being on Disability Living Allowance that could be stopped at any time is very scary too.
I can see what you're saying that broadly speaking, there can often be very little immediate financial difference between working a lot of hours and qualifying for no tax credits and benefits, and working fewer, and getting a lot of top ups
BUT I agree with all the others that its a short sighted view. The system is changing and people who have relied on tax credits could find themselves screwed.
I also totally agree with the poster who said many people nowadays don't get the principle of delayed gratification and want an immediate gain. Sometime you just need to look at the longer term. I know a few families who work very part time hours and qualify for all sorts of top ups, but they'll find it really tough when their kids get older and the benefits dry up and also none of them have given a thought to pension
you are forgetting the £500 a week cap that is being rolled out, that included all benefits so if you are talking about private rents in London i expect they will end up with nothing to live on once that comes into effect.
oh and i live on benefits its not fun or easy, i cant wait to get another job
I don't think anyone who is working and trying to do their best is a scrounger if they receive benefits that top them up to a decent income.
I do think that it's perverse that has to happen in the first place. Companies don't pay proper salaries, and housing costs have been allowed to spiral out of control (and not allowed to rectify, but that's another argument!).
In their case, they have a decent income, and a decent life anyway - what I found interesting was that (in the short term at least), they could possibly have a better life, given their interest in time vs money by reducing hours. But yes, there are intangibles (career development, long term retirement prospects) that are things I did not consider.
I agree wholeheartedly with foslady and portofino
I have been very tempted lately to just give up working for two years (and get dh too as well) as we would only be around £10 worse off per month if we did so. We would get mortgage interest paid, free school dinners, blah de blah de blah... Obviously we would both have to be sacked and don't want to be, and realistically would hate it but it is infuriating at times. Especially as we really are struggling right now.. might as well struggle and relax.
By the way, I am the queen of delayed gratification! I saved up for years to buy a place outright thinking I was doing the right thing - only to see firstly a boom, and then a bust that hasn't been allowed. Savers are demonised in my opinion, hence I was looking at alternative ideas for others - delayed gratification must not be allowed according to our economists and governments!
I think if the pay covers the cost of child care, but no more, it's worth it for mothers to work. It's the best way to keep a viable career.
Katy, in an ideal world I would agree with you. However, salaries are not really increasing these days - and companies are able to play on the 'dark times' rhetoric to even keep pay rises when promoted at a fairly low level.
If pay covers child care and no more, and there's an increasingly diminishing chance of being rewarded for it long term, better to be a SAHP - either sex.
I mean, it's still worth it. My previous post sounds like I say that she shouldn't work for more than the cost of child care.
It only pays to work for career reasons if you have a career type job. If you have a minimum wage type job (e.g. care work) that you could step back into in ten years time or are happy to pick up a part-time post in the future I think the incentives to work are really little. I love my job so the incentive to work is high but I can see for lots of people, the workplace is not rewarding in several senses, not least because there is so much instability in employment, zero contract hours, short contracts and so on.
It depends if you like your job or not and what you want to do professionally with the decades after your child(ren) grow.
Also, although work is unreliable, it's usually (if you ate a professional) more reliable than govt controlled benefits. And a professional job will be more reliable (salaried, sick-pay, redundancy) than a lower paid p/t job.
Exactly mumsy. Not everyone has a career type job - and these days, even those have glass ceilings everywhere because everyone is scared of taking risks.
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