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Misery for Millennials?

Over the 20th Century we saw more progress than any other time in history, with each generation enjoying higher incomes than the one before them and living standards rising steadily.  That progress seems to have come to a halt since 2000 in many developed countries, especially when income is taken into consideration. 

 

Out of all of the national economies, the UK stands out for the boom and bust cycle where strong income and housing gains for the post-war generations have failed to materialise for the generation known as Millennials

This was recently disclosed in a report by the Resolution Foundation, the non-partisan think tank that works to improve the living standards of those in Britain on low to middle incomes.   The report looked at household living standard changes for different generations across 8 high income countries and discovered that the global financial crisis has had a serious effect in halting generational income progress, with millennials in their early thirties having household incomes 4% lower than members of Generation X at the same age.  Despite the fact that the UK enjoyed the longest “boom” in generational income progress, this has since gone bust.

The UK also stands out from the other countries for experiencing a sharp reduction in income progress with a major reversal on housing.  Home ownership rates surged by 29% between those born at the beginning of the 20th Century and the baby boomer generation.  But this generational progress has been wiped out for millennials whose home ownership rate in their late twenties stands at 33%, compared with 60% for the baby boomer generation. 

This pay divide has also hit Millennials the hardest with the scale of the pay squeeze for those under 30 resulting in a 13% fall in real terms.  The lack of income progress combined with a decline in home ownership is a significant problem for today’s millennials, many of whom struggle to get onto the property ladder without serious financial help from parents.  In fact, many millennials are struggling with debts as they strive to maintain a decent standard of living. 

This is not just bad news for the generation of millennials, its bad news for the UK economy as a whole.  It’s bad for young workers, bad for families and bad for businesses.  Here in the UK, as in other countries, we’re likely to see many jobs lost to automation and AI in the coming decade or so and the world of work is likely to change rapidly.  Retraining and upskilling are going to be vital issues in addressing these problems, Those most likely to weather the coming economic challenges will be those people who are flexible and eager to learn new skills and new ways of working. 

With Brexit still to come, we’re living in uncertain economic times here in the UK and the future is not looking as sure or as rosy as it once did.  We’re likely to see more businesses going into liquidation, more people falling into debt and more people struggling to make ends meet.