Revealed: the 30-year economic betrayal dragging down Generation Y’s income

The Guardian – By Caelainn Barr and Shiv Malik – Monday 7 March 2016

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Photo: Millennials Photograph: The Guardian

Exclusive new data shows how debt, unemployment and property prices have combined to stop millennials taking their share of western wealth.

The full scale of the financial rout facing millennials is revealed today in exclusive new data that points to a perfect storm of factors besetting an entire generation of young adults around the world.

A combination of debt, joblessness, globalisation, demographics and rising house prices is depressing the incomes and prospects of millions of young people across the developed world, resulting in unprecedented inequality between generations.

A Guardian investigation into the prospects of millennials – those born between 1980 and the mid-90s, and often otherwise known as Generation Y – has found they are increasingly being cut out of the wealth generated in western societies.

Where 30 years ago young adults used to earn more than national averages, now in many countries they have slumped to earning as much as 20% below their average compatriot. Pensioners by comparison have seen income soar.

In seven major economies in North America and Europe, the growth in income of the average young couple and families in their 20s has lagged dramatically behind national averages over the past 30 years.

In two of these countries – the US and Italy – disposable incomes for millennials are scarcely higher in real terms than they were 30 years ago, while the rest of the population has experienced handsome gains.

It is likely to be the first time in industrialised history, save for periods of war or natural disaster, that the incomes of young adults have fallen so far when compared with the rest of society.

Experts are warning that this unfair settlement will have grave implications for everything from social cohesion to family formation.

A two-week Guardian project, supported by the Joseph Rowntree Reform Trust, aims to explore this predicament in depth and ask what can be done.

Using exclusive data from the largest database of international incomes in the world, at LIS (Luxembourg Income Study): Cross-National Data Center, the investigation into the situation in Australia, Britain, Canada, France, Germany, Italy, Spain and the US has also established that:

Prosperity has plummeted for young adults in the rich world.

In the US, under-30s are now poorer than retired people.

In the UK, pensioner disposable income has grown prodigiously – three times as fast as the income of young people.

Millennials have suffered real terms losses in wages in the US, Italy, France, Spain, Germany and Canada and in some countries this was underway even before the 2008 financial crisis.

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Photo: Millennials in Washington DC. Across the US, under-30s are poorer than pensioners. Photograph: Washington Post/Getty Images

“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 said there had been a shift since the mid-80s in poverty rates, which started to rise among younger cohorts while falling among pensioners. However, the world of barren opportunities facing today’s young people should be of concern to all age groups, he added.

“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.

Using LIS’s household survey data, the Guardian examined the disposable incomes and wages of young families in eight of the 15 largest developed economies in the world. Together these countries made up 43% of the world’s GDP in 2014.

Read entire article here

Note: Generation Y is a demographic in the US born between the mid-1970s to 2000. Also called echo boomers and Millennials (also known as the Millennial Generation) are the demographic cohort following Generation Y.

Posted by Teri Perticone

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