Millennials will be first generation in history to be worse off than their parents
Millennials will be the first generation to earn less than their parents over their lifetime, according to new research, which projects a downward trend that could be compounded further by Brexit.
The study found millennials have been hit hardest by the recent pay squeeze, which actually began before the financial crash, but has been made worse by the economic downturn.
Researchers at the Resolution Foundation, which studies inequality between generations, concluded that a “redistributive welfare state” is key and called on the government to renew the “intergenerational contract.”
The report, titled ‘Stagnation Generation: the case for renewing the intergenerational contract,’ found evidence of a growing divide between a prosperous older generation and a struggling younger generation.
It found that young people aged between 15 and 35 already earn £8,000 less in their twenties than the typical member of generation X, now aged 35 to 55.
The Foundation warns that the generational pay gap comes on top of a “bleak outlook for homeownership” for millennials. It notes that baby boomers were 50 percent more likely to own their own home by the time they turned 30, compared to millennials.
Researchers pointed to the government’s current tax scheme, which will take £1.7 billion from young people, while giving away £1.2 billion to baby boomers over the next four years.
The Foundation believes there is too little political debate about this often-overlooked area of policy.
“Fairness between the generations is something public policy has ignored for too long. But it is rising up the agenda with the prime minister, politicians of all parties, business leaders and others rightly identifying it as a growing challenge,” Resolution Foundation executive chair David Willetts said.
“This is about taking seriously the social contract between the generations that underpins our society and state, and recognising that everyone is worried about the future of younger generations,” he added.