Today's young workers “bore the brunt” of the financial crisis while older workers have seen an increase in real wages, according to a new report.
The report, entitled “Squeezed Youth” from the think tank Intergenerational Foundation, used ONS wage data to draw trends in real income for different age groups over time. According to the report, younger workers are now facing a “toxic combination of declining real wages and the rising cost of necessities, especially housing”, having borne the brunt of the financial crisis.
Earners aged 50 and above are enjoying higher wages than ever before; pay for this group has increased by 25% since 1997, when inflation is taken into account. At the other end of the scale, workers aged 18-21 saw their real wages drop by 19% in the same period. Wages for workers aged 22-29 saw an increase of just 2%.
According to the report’s conclusions, the recent financial crisis is largely responsible for this discrepancy in earnings:
“Real wages were generally improving for all age groups until the beginning of the recession in 2007," the report concluded, "although older age groups had seen their pay growing more rapidly. After 2007 all age groups witnessed a fall in real wages which had a larger impact on younger workers."
The report also warns of the implications for the future of the economy if earnings - and therefore spending power - don’t improve for younger workers:
“Real wages will have to grow very rapidly among workers currently in their 20s if they are to match the level enjoyed by the current generation of middle-aged workers," it said.
“It seems inevitable that many of today's young workers will find their lifetime earnings are 'scarred' by the misfortune of being young during a severe recession.”