We knew young people were finding it hard to get a job, buy a house, and even move out of home. Now we know just how bad it has become, as a new IFS report highlights the gap between young and old.
The main takeaway from a major report on living standards in the UK makes for more depressing reading for young people.
Out of the whole population, 22 to 30-year-olds adults have been hit hardest over the last five years, says the Institute for Fiscal Studies (IFS):
Compare this sorry state of affairs to older generations, and it looks even worse.
The graph below shows how the average 20-year-old fares in comparison to other working adults and to pensioners.
In fact the over 60s’ income (after housing costs) actually overtook the earnings of people in work for the first time in 2010.
The sorry state of affairs for 20-year-olds is because of two things: a fall in overall employment, bringing average earnings down, and a fall in real-terms pay for those who are in work.
The graph below shows how young people in their 20s used to earn more, on average, than those in their 30s.
The reason? Although earnings tend to rise with age, people in their 20s are less likely to have kids, and more likely to live with their parents or other working adults.
Graph: BHC = before housing costs, AHC = after housing costs
That trend has changed since the recession: the average income of working adults aged 31-59 (before housing costs) gets in line with, and eventually overtakes, the earnings of those in their 20s.
Once the cost of housing is considered, average income has plummeted for people aged 22-30 in the last five years: people in their 20s are more likely to be renting, and therefore paying more for their housing.
The report was funded by the Joseph Rowntree Foundation (JRF) social research charity, whose head of poverty research Chris Goulden said: “Over the past year young people aged between 22-30 in particular have fared the worst, seeing the sharpest rise of those now living in poverty. This is in contrast to pensioners, who the IFS say face relatively favourable conditions.”
The conclusion of the report? Young adults have “borne the brunt of the recession”.