Earning more but less secure: Unpaid carers, paid work, and the design of a cash allowance

Unpaid carers face economic penalties, often despite having paid work. Dubbed a ‘new’ social risk, related social policies and research have focused on promoting employment and bolstering the public safety net when insufficient or absent. Yet the design of existing benefit programs might also have ‘new’ perverse effects. Here I ask how large, for how long, among whom, and why, by analysing the UK’s Carer’s Allowance and its earnings limit. I rely on survey interviews from fifteen waves of Understanding Society (2009-2024). Penalties are investigated in terms of economic insecurity, a comprehensive concept spanning incomes and wealth, and combining material indicators and perceptions. With an event-study design, I compare carers with a history of Carer’s Allowance receipt to those without as their earnings progress. Carers with zero earnings report the highest levels of insecurity. When earnings increase, insecurity declines but not homogeneously. Past the earnings limit, carers with a history of Carer’s Allowance receipt report relatively more arrears with bills and housing, less regular savings, more dissatisfaction with income, and heightened financial worries. The relative gap in insecurity is large and persistent over time. Insecurity also affects other household members, and it is more pronounced for those in working-class positions and renters. These patterns appear unrelated to variation in caregiving involvement. Rather, differences in incomes, employment, and benefit receipt widen past the limit. By foregrounding the role of policy design, findings speak to studies on social risks and economic insecurity, broadening the case for reform spurred by recent benefit scandals.