A transatlantic divide has opened up in the living standards of millennials as those in the US fare better than Britons affected by the 2008 global financial crisis, according to new research.
People in the UK born in the late 1980s and early 1990s are still earning no more than those born in the 1970s did at the same age, the Resolution Foundation think tank noted.
Those now aged in their early 30s have experienced over two decades’ worth of lost progress on pay, it said, with UK millennials now on lower incomes than those before the financial crisis.
Meanwhile, living standards have bounced back for their American counterparts, due to higher household incomes and better income growth for young people in the US, the report said.
The foundation said its latest annual intergenerational audit examines how different generations across the UK have fared over the past 15 years in jobs, pay packets, housing costs, home ownership and wealth accumulation, with a particular focus on millennials on either side of the Atlantic.
To address the current situation, future policy decisions must work for younger generations, “breaking the established trend of income and wealth growth disproportionately benefiting older generations”, report co-author Sophie Hale said.
Across several economic measures, UK millennials have experienced considerably less progress than their US counterparts— Resolution Foundation report
Disposable incomes of US millennials in their early 30s were 21 per cent higher in 2021 than their predecessors had at the same age in 2007, the report found.
In the UK, incomes for the same group fell by 1 per cent over this period, the report said.
It put slower income progress for young people down to a “more sluggish” economic growth in the UK, resulting in lower overall income growth.
The analysts also said while the age profile of income growth favoured millennials in the US, with incomes of those under 40 growing faster than average, the opposite has been true of the UK.
Fifteen years on, this ‘crisis cohort’ are no longer young. And while many US millennials have bounced back, their counterparts in Britain are still wearing economic scars as they approach middle age— Sophie Hale, Resolution Foundation
The report concluded: “Overall, we do not find that improvements to millennials’ living standards in recent years have gone far enough to close generational gaps, or to eradicate the threat to the promise of intergenerational fairness within the UK.
“Across several economic measures, UK millennials have experienced considerably less progress than their US counterparts.
“This lack of progress ultimately results from the combination of a stagnant UK economy, limiting economy-wide prospects for pay and income progression, and millennials (and other younger Britons) getting a disproportionately low share of the rewards that have materialised.”
Sophie Hale, principal economist at the Resolution Foundation, said: “Young people across advanced economies were hit by the financial crisis, putting a stop to decades of progress where each generation enjoyed higher living standards than their predecessors.
“Fifteen years on, this ‘crisis cohort’ are no longer young. And while many US millennials have bounced back, their counterparts in Britain are still wearing economic scars as they approach middle age.
“Millennials today no longer enjoy higher disposable incomes than previous generations, and are far less likely to be home owners. Instead they are forced to live in high-cost, and often low-security, private rented accommodation that further impedes their living standards.
“The lack of progress made by millennials in the UK shows how important it is to restart meaningful growth in the UK, but also to ensure that policy decisions recognise the need for the country to work for younger generations – breaking the established trend of income and wealth growth disproportionately benefiting older generations.”
