You may be astounded to know that a grandmother in her 80s has a higher average living standard today than someone in their 20s who is working, due to high housing costs and poor wages, according to a recent Social Mobility and Child Poverty Commission report.
The report highlights a looming perfect storm of graduate debt, lack of finance to buy homes and job insecurity that threatens middle-class children as they emerge from full-time education.
Graduates will come out of university with up to £50,000 of debt.
The number of 18 to 24-year-old unemployed for more than two years is at its highest since 1994. “Then there's the missing 50,000 jobless teens who have dropped off the radar,” article in the Independent, dated 17 December. People, particularly the youth, are being mathematically eliminated from the system so as to cook the book and create a Peter Pan illusion of Britain being on the mend.
But that is far from reality. Children from the middle class, a dwindling socio economic group, are likely to be worse off. Finding a well paid full time job will become increasingly more difficult with many still paying their student debts into their forties. Just within the last decade the proportion of 25 to 34-year-olds who own their own homes has fallen from 60 per cent to 40 per cent. Unless there is a policy change, that trend is likely to accelerate.
A nation’s future is being branded the “lost generation”. Sociologists note that we haven't experienced anything like this since the great depression. Typically, as society gets wealthier, children get richer than their parents but this is no longer the case in advanced western economies.
Indeed, the “lost generation” is also an issue across the pond. Americans in their 30s have been hit particularly hard—their average net worth has decreased 21 per cent from what previous 30-somethings had in 1983, according to a grim study, published by a Washington D.C. think tank.
'For many, the American dream of working hard, saving more, and becoming wealthier than one's
Parents, holds true,' the study's authors write. 'Unless you're under 40.'
The Great Recession hit young homeowners in their 20s and 30s the hardest. But the study's authors say younger generations were in trouble even before the recession hit.
Stagnant wages, diminishing job opportunities and shrinking home values play an important role in younger American's harsh new reality. Lack of educational attainment higher than previous generations also factored in.
College debt makes savings impossible for this young age group. But while real wages remain stagnant, or even falling in some cases, most modern jobs require higher education. Even those with low hourly wages require at least a four-year degree. Approximately 20 million Americans attend University each year with nearly 60 per cent borrow to pay for tuition, according to the non-profit American Student Assistance.
The student debt has reached an eye watering level, amounting to roughly $870 billion in outstanding student debt, according to the Federal Reserve Bank of New York. A quarter of 30-somethings have outstanding loan debt, but only 7.4 per cent of borrowers older than 40 have outstanding debt.
In view of the student debt and current employment situation building up, a nest egg is difficult for the young generation.
Myya Beck, a 33-year-old from Wellfleet, Mass, laughed when she was asked by a reporter whether she had any savings.
'My glass is always half full. I'm still day by day trying to do something more. What else is there?' Beck said.
Beck runs her own fitness studio and works nonstop, but continues to struggle. Her earnings go directly to bills, college loans, rent and a car payment.
With a baby on the way, Beck is worried about her future. She owes over $15,000 in college loans.
'I mean, this is everything that I've ever wanted. I've always wanted to own my own business,' she said. 'I've wanted to be a mum and have a family most importantly, of my own, so I've gotten those things, but financially how do I do it?'
The study's authors suggest the government should pay more attention to the hardships of younger generations.
If current trends for younger generations are not reversed, within a few decades they may become more dependent than older people today, especially in retirement where safety net programs will be less capable of providing basic necessities in future.
A lost generation is also likely to cause a demographic time bomb in the next 15 to 20 years. If this age group isn't graduating from college/university and finding well paid secure jobs, they are unable to purchase their own homes and start a family. The millenials are living longer with their parents and delaying everything, purchasing their own homes, marriage, have kids etc.
Already a number of countries in Europe, particularly those in an economic depression are experiencing declining populations, in other words their populations are ageing. With a shrinking working age group and a ballooning retirement population, it can only mean more pressure on the public finances.
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