IFS: Recession Has Hit Young Adults Hardest
Young people have "borne the brunt of the recession" with their pay and job prospects hit much harder than older generations, a leading economic think tank has said.
The Institute for Fiscal Studies (IFS) found that among those aged 22-30 household incomes fell 13% between 2007-2013, wages plunged 15% and employment levels dropped by four points.
For those aged 31-59, income fell by 7%, wages by 6% and employment stayed stable, while the over-60s saw almost no impact on those measures.
The gap would have been even more pronounced but for the 25% of young adults still living with their parents, the IFS said.
The think tank - working with the Joseph Rowntree Foundation (JRF) social research charity - based its conclusions on the Government's Household's Below Average Income data.
It also found there was "no clear north-south divide" in recession-hit areas - with a wide spread in falls in median income from 8% in Northern Ireland to 2% in the East Midlands.
The IFS pointed out that a sustained period of low interest rates and real-terms falls in private rents had benefited young people's finances but that home ownership continued to plummet - spelling further costs for a generation of renters.
Only 21% of people born in the mid-1980s had bought their own place by the age of 25 - compared with 34% of those a decade earlier and 45% born in the mid-1960s, it said.
IFS research economist Jonathan Cribb said: "Pay, employment and incomes have all been hit hardest for those in their 20s. A crucial question is whether this difficult start will do lasting damage to their employment and earnings prospects."
JRF head of poverty research Chris Goulden said the research showed how a shortage of affordable homes and rising rent costs were forcing some 600,000 people to live below the poverty line after paying housing costs.
He said: "We need a comprehensive strategy and sufficient political will to get to grips with poverty. That means addressing low pay, the high cost of essentials, such as housing and childcare, and reform to the tax and benefits system to ensure work is a route out of poverty."
Labour Treasury spokeswoman Catherine McKinnell said: "While David Cameron denies there is a cost-of-living crisis, these figures show people have seen a substantial fall in their income since 2010.
"The IFS's research shows that young people have been hit particularly hard over the last few years.
"Labour will act by boosting apprenticeships and making sure young people who don't have the skills they need to get a job are in training, not on benefits."
A Treasury aide said: "This shows just how hard Labour's great recession hit young people and why it's vital we keep working through our long-term economic plan which is cutting the deficit, creating jobs and equipping people with the skills they need for the future."