Squeezed youth: the intergenerational pay gap and cost of living crisis

Document type
Kingman, David; Seager, Ashley
Intergenerational Foundation
Date of publication
24 February 2014
Children and Young People, Employment
Social welfare
Material type

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Who have been the biggest victims of the “cost of living crisis” which has occured in Britain since the beginning of the recession in 2008? In this study, IF analyses data taken from the Annual Survey of Hours and Earnings (ASHE) and the annual Family Spending survey to argue that it is the young who have borne the greatest burden, as they have been hit by a toxic combination of falling real wages and rising costs for a number of essential goods.

This study reveals that there has been a striking divergence between the earnings of older and younger workers; the median gross weekly wages of someone aged 18 to 21 have fallen by almost a fifth in real terms since 1997, whereas workers who are in their fifties have seen their earnings increase by 25% over the same period. As a result, households headed by young people are now spending more than ever before on basic necessities such as housing costs, food, fuel, power and transport, leaving them with precious few spare resources to devote to other goals such as saving for a mortgage deposit, starting a family or putting money aside for their retirement. This will have wider implications for the rest of society, while it also helps to entrench the advantages enjoyed by young people who have the option of receiving financial support from their parents, a trend which threatens to reverse decades of social progress.

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