Exclusive new data has been released to show how unemployment in combination with property prices are stopping Generation Y from gaining their fair share of the western wealth.
The full extent of the financial disaster millennials are facing has been revealed recently. New found data showed the set of factors paralising an entire generation of young adults everywhere around the world.
It’s the combination of debt, joblessness, globalisation, demographics and rising house prices that is depressing the salaries and prospects of young people in the developed world and will result in unprecedented inequality between generations.
An investigation by the Guardian into the prospects of Generation Y – those aged between 20 and mid-30s – has revealed that they are increasingly being left out of the wealth generated in western societies.
In the mid-80s young adults used to earn more than the national averages, looking at the same statistics now, they’re falling as low as 20% under average. To put this in context, pensioners are seeing soaring incomes.
In seven major economies across North America and Europe, the growth of income of an average young couple or family in their 20s has fallen significantly behind the national averages over the past 30 years.
In two of those major economies, the US and Italy, Generation Y’s disposable incomes are barely higher in real terms than they were 30 years ago, while the rest of the population has made some impressive gains.
Chances are, this is the first time in industrial history that the incomes of young adults have fallen so low compared to the rest of society.
Experts expressed warnings that these unfair developments will have serious implications for everything starting at social cohesion and ending with family formation.
The Guardian brought to life a project, supported by the Joseph Rowntree Reform Trust, which aims to explore this predicament in more detail and asks what can be done.
With the help of exclusive data from the largest database of international incomes in the world, at LIS (Luxembourg Income Study): Cross-National Data Center, an examination of the situations in Australia, Britain, Canada, France, Germany, Italy, Spain and the US also found out that:
- Prosperity has dropped for adults in the wealthy world.
- In the US, under-30s are now poorer than retired people.
- In the UK, disposable income has grown three times faster for pensioners than for young adults.
- Millennials have experienced real term losses in wages in the US, Italy, France, Spain, Germany and Canada, which in some countries was already underway before the financial crisis of 2008.
“The situation is tough for young people,” said Angel Gurría, secretary general of the west’s leading thinktank, the Organisation for Economic Cooperation and Development (OECD). “They were hit hard by the Great Recession, and their labour market situation has improved only little since.”
“This is a problem we must address now urgently. Kicking it down the road will hurt our children and society as a whole.”
Gurría explained the shift that has been happening since the mid-80s in poverty rates, starting to rise among younger cohorts whilst falling among pensioners. He also added that today’s world, desolate of opportunity for young people, should be a concern for all age groups.
“Current working-age, middle-class groups are increasingly concerned with their and their children’s job prospects. An increasing number of people think children in their country will be worse off financially than their parents,” he said.
The Guardian examined the disposable incomes and salaries of young families in eight of the 15 largest developed economies in the world, using LIS’s household survey data. These countries accounted for 43% of the world’s GDP together in 2014.
Those surveys have been carried out over decades with the intention to analyse what is actually happening in people’s homes. It’s the most efficient way to extract domestic realities from governmental level data.
The data revealed that the average disposable income of people in their early 20s in the US, France, Germany, Italy and Canada is over 20% below national averages.
For the first time ever, recent pensioners in France generated more disposable income than families headed by a person under 50. In Italy, average under-35s became poorer than average pensioners under 80. The most recent US data showed that those aged under 30 had less income than those aged 65-79. This has happened for the first time since the collection of the data has started.
When the Guardian interviewed millennials, the overall feeling was that this generation was experiencing far greater hurdles to establish themselves as independent adults than previous generations did.
Fiona Pattison, a 30-year-old accounts director at a fundraising agency, said that although she received pay rises and promotions, her lifestyle hadn’t improved over the last six years.
“Everything I’ve made in terms of a pay rise has gone into living and saving. My lifestyle has remained exactly the same. Any dent in employment or income would mean I’d have to go back to sharing again.”
Londoner Tanaka Mhishi, who works in a bookshop, adds: “I definitely think in a lot of ways my parents’ generation was luckier. They had a lot more freedom to do things younger: they were able to go straight from university and move to London and afford their own flat.”
“We definitely have to make more compromises. Compromises like if I want to have kids by the time I’m 30, or even 40, can I still have the career I want to do?”
A variety of economists told the Guardian, to avoid economic stagnation policymakers would have to do more to even the chances between young and old.
The director of the Institute of Fiscal Studies, Paul Johnson, expressed his fear that intergenerational inequality could fuel wider inequality in society due to youngsters born to rich parents experiencing such a powerful advantage in the important years of adulthood.
Johnson said: “I think the real unfairness issue comes in the sense that it’s become more and more important whether your parents happen to have a house.”
The Guardian’s series on the developed world’s young adults, and their downfalls, is aiming to explain that young people aren’t delaying adulthood because they are, according to the New Yorker, “the most indulged young people in the history of the world”. It’s rather because it seems like they don’t have the possibilities to hit the same stages at the same time their parents did.
In Australia, Generation Y is being kept out of the housing market. In the UK, new figures will show the concept of a property-owning democracy has already been terminated. In the US, the millennial millstone goes by the name of debt – young people have stacked up $1.3tn of student debt.
Across Europe, the issue lies more within jobs, or the lack of them. The number of adults in their 30s still living with their parents is surprisingly high in Italy and Spain, leading to grave consequences for birthrates and family formation in places where demographics are already expressing a strong tendency towards an aging society.
“We’ve never had, since the dawn of capitalism really, this situation of a population that is ageing so much and in some countries also shrinking, and we just don’t know whether we can continue growing the economy in the same way we once have,” said Prof Diane Coyle, an economist and former UK Treasury adviser.
Source: The Guardian