Reduced home ownership, pensions benefits and wage stagnation have all hit the 1980s cohort hard
People in their early thirties are the first post-war cohort not to enjoy higher incomes than those born in the previous decade, new research from the IFS shows.
The median net household wealth of people born in the 1980s is £27,000 per person, whereas those born in the ’70s had median wealth of £53,000 at the same age.
The disparity can be attributed to lower rates of home ownership, reduced access to defined benefits pensions, and the fact that young people’s jobs and income were hit especially hard by the great recession.
IFS economist and report author Andrew Hood commented:
“By the time they hit their early 30s, those born in the early 1980s had about half as much wealth as those born in the 1970s did at the same age.
Sharp falls in home-ownership rates and in access to generous company pension schemes, alongside historically low interest rates, will make it much harder for today’s young adults to build up wealth in future than it was for previous generations.”
The research also shows that in their late 20s, renters in this cohort paid significantly more in housing costs than those with mortgages.
This is a new phenomenon, which drains the incomes and reduces the living standards of renters, as well as preventing saving and shutting them out of the housing market in the longer term. In fact, home ownership rates among people born in the 1980s are closer to the rates of those born in the 1930s than to any cohort in between.
This generational divide was one of the injustices that the prime minister pledged to fight in her first speech from the steps of Downing Street, pointing out that ‘if you’re young, you’ll find it harder than ever before to own your own home’.
This report demonstrates that realising that promise will require coordinated reforms in a range of policy areas, including expanding access to housing, reversing wage stagnation and improving the conditions and employment prospects of young workers.
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