Many working people in low paid jobs are stuck in poverty with no route out, a report has said.
The government's Social Mobility Tsar, ex-Labour minister Alan Milburn, says that work no longer consistently pays enough to lift people out of poverty.
Wages for most have been stuck below inflation since 2003, meaning they have been getting poorer for ten years.
The government will miss its child poverty targets because of this as well as its savage cuts to benefits.
This week saw confirmation that the gap between wage growth and the cost of living is getting bigger, as inflation stayed at 2.7% while pay only rose 0.7% over the last year.
The concentration of that growth among the richest means poverty is spreading up the social scale, with many middle class children likely to be poorer than their parents.
Unemployed people need entry-level jobs to pay liveable wages to be able to afford to take them, but the coalition government has concentrated its 'make work pay' agenda entirely on reducing the value of benefits.
Milburn believes that, given the state of public finances, it should be companies that take up the challenge of making wages liveable.
He recommends more career development opportunities to allow the low paid to advance, and higher entry-level pay including a rise in the minimum wage.
Two-thirds of children in poverty came from a family in which at least one parent was working, with most of those working full-time.
Five million people earn less than the minimum wage, with Milburn saying of them:
"These are the people frankly who do all the right things, they go out to work, they stand on their own two feet, they look after their families - they're the strivers not the shirkers - and yet they're all too often the forgotten people of Britain and I think they desperately need a new deal."
Pensions have been gaining value during the austerity drive, and Milburn believes it is time to consider sharing the burden with older people.
This idea was rejected by Deputy Prime Minister Nick Clegg.