Workers aged 15-35 could become the first generation to earn less than their predecessors over their working lives, according to research by the Resolution Foundation.
As a result of recent tax changes, people under 35 earn £8,000 less during their 20s than the previous generation.
While young people have faced difficulties entering the labour market after the financial downturn beginning in 2008, the report contends that the generational pay progress (GPP) had begun to slow before the recession.
- In an optimistic scenario where future pay of young adults improved and follows the same as baby boomers, lifetime savings would be around £890,000 – reducing GPP to 7% over previous generations
- In a worse scenario where future pay follows generation X, lifetime savings would be reduced to £825,000 – making young adults to face GPP by earning less than their predecessors.
Torsten Bell, director of the Resolution Foundation, said:
“The financial crisis has played a role in holding millennials back, but the problem goes deeper than that.
Even on optimistic scenarios they look likely to see much lower generational pay progress than we have become used to, and there is even a risk that they earn less over their lifetimes than older generations, putting generational pay progress into reverse.”