From increased job insecurity to an impenetrable housing market, we all know that millennials face big financial challenges compared to their parents’ and grandparents’ generations.
But that bleak perspective has now been backed up by the results of a major new study, released on Monday. The research, conducted by the Resolution Foundation, shows that millennials in the UK earned £8,000 less in their 20s than the generation that went before them – and may be the first workers in modern history to see a drop in their lifetime earnings.
The research analysed how three generations had fared financially: the baby boomers, born in the late 1940s to early 1960s; their children, known as Generation X; and Generation X’s children, who are young adults today.
It found that older millennials, now in their early to mid-30s, were the first demographic to earn less than people five years older than them, the Guardian reports.
Younger millennials, who entered the workplace during or after the 2008-9 recession, have seen their earnings damaged even more – and the report warned that their prospects might never recover.
In the best-case scenario outlined by the study, millennials’ pay will improve rapidly, with their finances then following the same path as their grandparents’ generation. However, even in this (very, very optimistic) situation, current young people would only earn 7% more than their parents over their lifetimes – just a third of the edge Generation X had over their parents.
But another potential outcome predicted by the Resolution Foundation is even gloomier. If millennials’ future pay follows the path of Generation X, rather than the baby boomers, they will become the first ever generation to earn less than their predecessors over their working lives.
The Resolution Foundation warned that this bleak outcome could be prompted by the economic aftershock of Brexit, combined with the weak productivity predicted by the Office for Budget Responsibility and falling pay growth.
Unsurprisingly, the report confirmed that prospects of home ownership for millennials look grim. Overall, people born between 1981 and 2000 will pay £53,000 in rent by the time they reach 30 – £44,000 more than their grandparents’ generation did. Just under two-thirds of baby boomers owned their own home by their 30th birthday, compared to 42% of millennials.
As she entered Downing Street last week, Theresa May referred to the growing gap between “a more prosperous older generation and a struggling younger generation”, and spoke of the need to take action to ensure that “young people [do not] find it even harder to afford their own home”.
Torsten Bell, director of the Resolution Foundation, said: “Generational inequality risks becoming a new inequality for our times, and nowhere is that clearer than on pay. We’ve taken it for granted that each generation will do much better than the last – earning more and enjoying a higher standard of living. But that approach risks looking complacent given the realities of recent years and prospects for the future.”
Catching up: the UK’s most well-paid jobs, according to the Office of National Statistics
News about millennials’ job and home-owning prospects is rarely encouraging. But if you’re in one of these professions, you might be in with a fighting chance…
- Brokers. Average pay before tax: £128,231
- Chief executives and senior officials. Average pay before tax: £122,967.
- Marketing directors. Average pay before tax: £89,933.
- Aircraft pilots. Average pay before tax: £87,474.
- Financial managers and directors. Average pay before tax: £82,565.
- Financial institution managers and directors. Average pay before tax: £80,755.
- Medical practitioners. Average pay before tax: £80,628.
- Legal professionals (except judges, barristers and solicitors). Average pay before tax: £80,578.
- Air traffic controllers. Average pay before tax: £77,220.
- IT directors. Average pay before tax: £70,971.
Images: HBO, iStock, Rex Features