Young Britons in Generation Z are earning more in the early stages of their careers than millennials did at the same age, according to analysis that may ease political fears of a so-called lost generation.
The Resolution Foundation found that those born between 1996 and 2000 have incomes 15 per cent higher, before housing costs, than millennials born between 1986 and 1990 at the equivalent stage of their careers – effectively a £3,700 ($4,870) a year boost.
Improvements in living standards from one generation to the next have stalled in recent decades amid sluggish real wage growth and high housing costs. Looking to explain the findings, the think tank pointed to steep increases in the UK’s minimum wage, helping Gen Z, and the fact that many millennials come of age in the aftermath of the financial crisis.
The career prospects of Generation Z have become a political concern after youth unemployment rose to its highest in over a decade, with more than a million 16 to 24-year-olds not in education, employment or training. It prompted a government review by former minister Alan Milburn to warn of a “lost generation.”
Still, Gen Z is benefiting – financially at least – from more young people living at home with their parents rather than entering the property market. Some 63% of those aged between 20 to 24 still live at their family home, up 12 percentage points since 2011.
“Impracticably high rents and house prices have driven this boom,” said Lalitha Try, economist at the Resolution Foundation.
However, a separate report by the Institute for Fiscal Studies, also published Thursday, said many graduates are not reaping the rewards of going to university. It warned that a quarter of graduates can expect to be worse off over their lifetime from going to university with many taking on large amounts of debt to pay for their education.
The IFS found that the average graduate can still expect to be £100,000 better off over their working life from getting a degree when accounting for factors such as taxation and student loans.
Outcomes differ markedly between subjects. Those taking courses such as philosophy and creative arts can expect to be worse off with on average £60,000 hit for performing arts graduates. Medicine and economics offered the highest lifetime earnings boost.
Andy Burnham, the likely replacement for Keir Starmer as prime minister, has warned that UK education policy has been “dominated” by the university route and argued for more support for technical qualifications or those wanting a “more direct route to the world of work.”
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