Millennials typically earn around £8,000 less in their 20s than a person from the previous generation thanks to weaker economic prospects, a study has warned.
The finding, contained in a study by the Resolution Foundation, mean the generation is believed to be the first to earn less than their parents.
The research defined millennials as under-35s – people born after 1981 – and found they had taken the brunt of a recent pay-squeeze compared to “Generation X” and “Baby Boomers”.
The new UK Prime Minister Theresa May warned on Wednesday of a “growing divide between a more prosperous older generation and a struggling younger generation”.
While some of the £8,000 is down to millennials entering the job market around the 2008 Great Recession, wages had in fact stopped rising for new workers before the financial crisis hit, the report says.
Even under the most optimistic path examined by the think-tank, progress in wages would slow significantly compared to that made in the mid-20th century.
The Foundation believes that the effects of leaving the EU could depress young people’s wages further.
It is launching an Intergenerational Commission to further investigate the issue and has called for a new generational “social contract” to be at the heart of Ms May’s economic policy.
The same Foundation also found that more of Millennials lower wages’ tend to be spent on rent. It found that the generation will spend more than £40,000 more on rent by the age of 30 than their parents.
The findings come after a huge divide in the way generations voted in the EU referendum. According to pollsters YouGov, 75 per cent of 18 to 24-year-olds were planning to vote Remain, along with 56 per cent of 25 to 49-year-olds. Ultimately Leave won, thanks to overwhelming votes from older people.
David Willetts, executive chairman of the Resolution Foundation, 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.
“In the real world there is no such thing as generational war – instead there are parents, grandparents, families and communities all sharing the same hopes for younger generations.”
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.
“Far from earning more, millennials have earned £8,000 less during their 20s than the generation before them. The financial crisis has played a role in holding millennials back, but the problem goes deeper than that.
“Even on optimistic scenarios they look likely to see much lower generational pay progress than we have become used to, and there is even a risk that they earn less over their lifetimes than older generations, putting generational pay progress into reverse.”
A spokesperson for the Department of Work and Pensions said: “This Government is determined to build a Britain that works for everyone, not just the privileged few.
“We will ensure that as our economy grows the benefits are enjoyed by everyone in the country and not just those at the top.
“That means building our skills base, developing a proper industrial strategy and improving education so that we help everyone – no matter what their age, social status or background – to reach their full potential.
“By creating three million apprenticeships by 2020 and working to halve the disability employment gap, we are helping more people of all ages and abilities get into in work – and stay there.”
Courtesy: Independent
