From education to employment

Millennials in the East Midlands are earning less than people born 15 years earlier

29 August 2019

Millennials in the North East have experienced the UK’s biggest pay growth compared to the generation before them, but those in the East Midlands are earning less than people born 15 years earlier, according to new Nuffield-funded research published today by the Resolution Foundation.

Mapping millennials’ living standards examines how young adults across Britain today are faring in terms of their pay, employment, home ownership and housing costs as compared to previous generations, and focuses on how those born between 1986 and 1990 compare with those born 1971-75. The new research reveals big regional differences in generational progress on living standards that are shaping the experiences of millennials across the UK.

The Resolution Foundation notes that generational progress on pay has been weak nationally, with those born in the late 1980s earning just 3% more at ages 26-28 than those born in the early 1970s at the same age; this cohort earned 16% more at age 28 than those born 15 years earlier in the late 1950s.

However, young people in the North East have made considerable pay progress compared to the generation before them, with the late 1980s cohort earning 13% more at ages 26-28 than the early 1970s cohort at the same age – a real pay gain of £46 a week.

In contrast, those born in 1986-90 – the late 1980s cohort – living in the East Midlands, South East and London are all earning less in their late 20s than the 1971-75 cohort at the same age. More positively, though young people in London and the South East still earn more than people of the same age in other parts of the country, this fall-back means that the regional earnings gap across the country has narrowed.

The analysis also finds that young people in most parts of Britain are more likely to be employed in their late 20s than previous generations. As with pay, millennials in the North East have made the biggest generational progress, and are 4% more likely to be employed than their predecessors, born 15 years before, were at the same age. More worryingly – and despite record high levels of employment nationally – the West Midlands and Yorkshire & the Humber have lower employment rates than the UK average for those aged 26-28, and young adults in these regions are less likely to be in work today than the generation born 15 years before them at the same age.

While the picture on millennials’ pay and employment is mixed, the analysis finds that young people have had a near uniformly bad experience when it comes to housing. Home ownership rates amongst 26-28 year olds have nearly halved in almost every region in the country with the largest fall being in London. Nearly one-in-five young adults in the capital owned their own home 15 years ago, but the figure today is closer to one-in-twenty. The West Midlands also stands out: it has had the second-largest decline in young adults’ home ownership, and as a result now has lower rates of home ownership for those in their late 20s than everywhere except London and Northern Ireland.

The research also finds that – with the exception of those in Wales – millennials across the country are spending a larger share of their income on housing than previous generations. The biggest increase in housing costs as a share of income has taken place in Scotland – young people in previous generations spent 15% of their income on housing, while for young people now the share is 21% – though young Londoners still spend the most on housing, at over 30% of their income.

The report concludes that no region stands out as performing consistently well in terms of generational progress on living standards. However, the big differences across the country in how young people have fared show that interventions should be crafted to address issues at a regional level.

It notes that the West Midland’s recent drop in employment rates for all ages has led to young adults here falling behind in terms of generational progress. Meanwhile, those in the North East have fared relatively well in terms of earning and working more than their predecessors, as a consequence of improving graduate retention rates and pay growth for all ages in the region.

Maja Gustafsson, Researcher at the Resolution Foundation, said:

“When people think about how they are doing in terms of their pay and career, they’re more likely to compare themselves to peers and previous generations where they live, than to people in other parts of the country.

“Millennials are generally earning and working more than the generation before – but there are exceptions, and the degree of generational progress varies enormously. A young adult working in the North East earns less on average than someone of the same age in London – but compared to their predecessors at the same age, young people in that region have made the largest employment and pay gains of anywhere in Britain.”

“The situation in the Midlands is more worrying, with a lack of progress for young adults despite employment in the UK reaching record highs. Improving the labour market in the Midlands should be a clear priority for policy makers.”

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