November 1, 2016 : Craig Wilson
Millennial miseryIt's time for bold thinking to close the gap between the old and the young
Last week I celebrated a birthday (belated gifts will be accepted) and entered the final year of my twenties.
Thankfully, the prospect of exiting an age range synonymous with ‘youth’ doesn’t fill me with existential dread.
However, I’m aware this could be regarded as the final opportunity to revise the age of adulthood upwards, having previously set it at 18, 21, 25 and (now) 30).
With guaranteed sage-like wisdom almost upon me, I thought it’d be interesting to look at how our younger generation has collectively fared over the last couple of decades – particularly in comparison to the older folk among us.
As I suspected, the findings make for grim reading:
- Millennials – those born between 1980 and the mid-90s – are about to become the first generation to earn less than their parents.
- Between 1979 and 2010 the disposable income available to 25- to 29-year-old’s fell by 2%. By contrast, disposable income for those aged 65 to 69 grew by 66%.
- The incomes of those aged between 22 and 30 are down 8% since 2007. Meanwhile, the incomes of people aged over 60 have risen 7% over the same period.
- Almost 30% of 22- to 30-year-olds live in absolute poverty (after accounting for higher housing costs), whilst the pensioner poverty rate is around 15%.
There are myriad reasons for all of this. Older generations got to take advantage of lower house prices (and rents) when they were younger. Two thirds of baby boomers owned their own home by the time they were 30, while only 42% of millennials have achieved the same.
Often dubbed ‘Generation Rent’, the Office for National Statistics says that, for the average under 30-year-old, 25% of monthly outgoings are spent on rent – amounting to £44,000 more than baby boomers paid out by the time they reached 30.
Even in the Blair years, when poverty fell in the UK, assistance was always aimed at older people and families with children. As a result, the poverty rate for young people without children actually rose.
The introduction of the national minimum wage did little to help, with a separate lower rate for young people. This was also the era when tuition fees arrived.
perhaps now is the time to re-asses the relatively privileged status of older generations in our society
While older people have benefitted from concessionary travel, free TV licenses, tax breaks, triple lock pensions and fuel payments, it is arguable that this has reinforced the intergenerational divide at a time when millennials face increased living costs, student debts, falling wages and higher unemployment.
Intergenerational inequality is likely to fuel broader inequality in our society, with young people from households where parents are wealthy or own their home gaining an unfair advantage in their formative years.
It’s a fact that wealth (pensions, savings, assets and property) is disproportionately held by older generations, making it completely inaccessible to millennials. As a solution, Abigail Rees from ResPublica makes a powerful case for switching the focus from taxing income to taxing wealth and assets.
Without intervention, it looks like lower living standards are set to dog millennials in to old age. It has been estimated that a 25-year-old today needs to save the equivalent of £800 a month over the next 40 years to retire at 65 with an income of £30,000 a year. With most millennials contributing no more than 5% of their salary a month to a pension, this would require them to be on a salary of more than £60,000 per annum!
Considering millennials form the backbone of our economy, this is not a problem we can ignore. A generation of young people who can’t afford to transcend to real adulthood, are unable to contribute to the economy, or live well in old age, is a crisis waiting to happen.
With ‘tough choices’ in vogue at the moment, perhaps now is the time to re-asses the relatively privileged status of older generations in our society; re-consider the sanctity of some sacred cows and begin to redistribute inaccessible wealth instead of merely taxing income.
Such lefty nonsense would no doubt prompt my dear Dad to tell me to ‘grow up’, but I’ve still got a year left.