Britain’s millennial generation, born since 1981, have suffered a bigger reversal in financial fortunes than their counterparts in most other developed countries except Greece, according to a study.
The report by the Resolution Foundation paints a gloomy picture for all young adults across the developed world – apart from the Nordic countries. It highlights how incomes are depressed, jobs scarce and home ownership is slumping for the millennial generation compared with the baby boomers that preceded them.
But it also reveals that on many measures – apart from unemployment – British millennials have suffered a more significant decline than those in other countries.
“The scale of the pay squeeze for those aged under 30 is surpassed only by Greece,” said Resolution. It found that in 2014, British people born in the years around 1980 earned 13% less than those born around 1970 did at the same stage in life. In Greece this decline was 25%.
It also found that the pay squeeze on British under 30s was twice as big as the squeeze on those in their 50s – a bigger age divide than in any other country.
Home ownership rates have also tumbled far faster in the UK than elsewhere, although Australian millennials are also finding it increasingly difficult to buy homes.
Although precise definitions differ, broadly speaking millennials are those people born between the early 1980s and the late 1990s. They are so called because they turned 18 in or after 2000. They are also collectively known as Generation Y
“Generation-on-generation progress has been all but wiped out for millennials whose home ownership rate in their late 20s, at 33%, is half that for the baby boomers at the same age (60%),” the foundation said.
“Falling home ownership for young people in their late 20s is also found – albeit to a lesser extent – in Australia (a 12 percentage points fall from boomers to millennials) and the US (a six percentage point fall).”
The UK was ranked third worst among developed countries for high house prices in relation to incomes, behind only Denmark and Greece.
But while UK millennials cannot access the property ladder, they are able to find jobs, in contrast to young adults in southern Europe. Resolution said the youth unemployment rate (15-30) more than doubled in Italy, Spain and Greece between the early 2000s and the years following the 2008 financial crisis, and remains above 25%.
“In contrast, youth unemployment in the UK [at 9%] is almost as low today as it was during the 2000s, though there has been a rise in atypical working, such as zero-hours contracts and self-employment,” said the report.
But while many of the financial woes afflicting the millennial generation date to the financial crisis of 2007-08, the halt in generational progress can be traced much further back, particularly in the US.
In an extraordinary finding, Resolution said those born in the US in the late 1960s - known as “generation X” – are no better off than those Americans who were born in the early 1920s at the same stage in their life.
“Median income for older members of generation X in the US [those born in the late 1960s] is currently no higher than median income for the youngest members of the greatest generation [those born in the early 1920s] when this group was also aged 45-49,” said the report.
It said the flattening of US incomes is a trend that long preceded the financial crisis and is being driving “in part by sustained increases in inequality during this period”.
It added that job mobility in the UK among young adults has fallen significantly, which may act as a drag on pay, while there has also been a shift towards part-time working among men.
“The sort of work that young people do has also been changing since long before the crisis. In the UK and some other northern European countries there is evidence of a structural rise in part-time working particularly among young men.”
In most developed European countries, there is now a widespread belief that young adults will be worse off than their parents – with the French the most pessimistic. Only 10% of French people think young people will be better off than their parents, while 71% believe they will be worse off.
The UK was fourth from bottom in the survey, with 22% believing young adults will be better off, and 50% saying they will be worse off.
In China, the picture is reversed. There, only 7% expect young people to be worse off than their parents, with 78% optimistic that they will be financially better off.