Unequal legacy of crisis leaves young with economic mountain to climb, according to new LSE report
People in their twenties have been the worst affected by the economic crisis despite higher qualifications than any earlier generation, according to a comprehensive LSE analysis of what has happened to inequalities in qualifications, employment, pay, incomes and wealth since 2007.
The research, led by Professor John Hills, shows that those in their twenties and early thirties have been hardest hit by far than any other group, with the greatest drop in full-time employment, largest rises in unemployment, and greatest falls in real wages.
While wealth rose for households aged over 65 between 2006-08 and 2010-12, it fell for younger ones. By 2010-12, median total wealth for households aged 55-64 had grown to £425,000, including pensions, but had fallen to £60,000 for those aged 25-34. To bridge the £365,000 gap would require young households to save or make pension contributions of £33 for every day for thirty years.
The report looks in detail at which groups have gained and lost – comparing men and women, and housing tenure, region, ethnicity, and disability as well as age group. Other findings include:
The new report, Falling Behind, Getting Ahead: The changing structure of inequality in the UK, 2007-2013 examines what has changed since the situation described in the 2010 report of the National Equality Panel (which used data centred around 2007). The new report uses data from 2013 (or the financial year 2012/13 in the case of incomes, or July 2010-June 2012 for wealth) to give a detailed picture of how different groups have been affected since the crisis.
It concludes: “The crisis and its aftermath have not affected everyone equally. These differences in economic fortune and misfortune over the last seven years will form a key part of the social inheritance of whatever government is elected, or re-elected, in the coming General Election, affecting the ways society and public policies evolve over the years and decades to come.”
Professor Hills commented: “The generation born in the 1980s did what was asked of it in gaining more qualifications, but has paid the greatest price through the crisis and is now earning much less than they might have expected. Their future prospects now depend more than ever on what happens to the wealth of their parents and grand-parents. But that is very unequally distributed, and so will be who get helps and benefits from inheritance.”