The income gap between young people and their parents’ generation has widened since the financial crisis, with people in their 20s suffering the greatest loss of wealth of any age group, according to an in-depth study.
Twenty-somethings are better qualified than any previous generation, a report by the London School of Economics (LSE) found.
Despite this, the demographic has experienced the biggest fall in full-time employment, the largest rises in unemployment, and the biggest drop in real wages of any age group.
Factoring in housing costs, the typical income for young adults in 2012/2013 was nearly a fifth lower than five years earlier.
Researchers at LSE’s Center for Analysis of Social Exclusion (CASE) investigated inequality in the UK from 2007 to 2013, the period of the economic crash and its aftermath.
Their research found “the economic crisis and its aftermath have not affected everyone equally.”
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Led by Professor John Hills, the team discovered young people were much worse off than their parents’ generation.
“By 2010 to 2012, the median total wealth for households aged 55 to 64 [had] grown to £425,000, but had fallen to £60,000 for those aged 25-34.”
In order to bridge the £365,000 wealth gap across the generations, young people would have to “save or make pension contributions of £33 every day for the next thirty years.”
Speaking to the Guardian, Hills said: “To close the gap you’ve got to save £12,000 a year, and that’s pretty difficult when you’re talking about households with incomes of £24,000 for all their expenses.”
This dramatic loss of wealth has befallen a generation that is more likely to have a university education than its predecessors. By 2013, more than a third of men and women in their thirties held a degree.
Despite these qualifications, young adults saw their hourly wages and weekly earnings fall faster than any other age group.
Median figures indicate men and women under 30 were paid 10 percent less than the same age group six years prior.
For 16-19 year olds with low incomes, the drop was closer to 30 percent.
By contrast, high earners in their early sixties saw a 10 percent increase in their salary during the same period.
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Researchers at LSE concluded the future wealth of young people today will be determined by how money is transferred between the generations.
They said: “What will matter most will be the wealth of older generations, and to whom it is passed on.”
“That wealth is, however, highly unequally distributed. Therefore the way it is passed as financial assistance or inheritance to a younger generation most affected by the earnings squeeze will also be highly uneven.”
The economists said this inequality will “form a key part of the social inheritance of whatever government is elected, or re-elected, in the coming general election.”
Duncan Exley, director of The Equality Trust, said the report demonstrates a need for government action.
Speaking to RT, he said: “This report shows a key aspect of the economic inequalities that make the UK a substantially disunited kingdom...alongside the wealth gaps between generations illustrated in this report, the UK also has one of the developed world's highest gaps in incomes within generations.”
“Unless the government makes inequality reduction a national target, it will preside over a country increasingly weakened by social and economic fractures,” he added.