If you think millennials are complainers who haven't been hard done by, you need to hear the facts

Older readers are saying that young people should simply adjust their expectations downwards. That would be rather rich considering the extent to which the expectations of the over-sixties are being catered to by politicians, whether through a generous “triple lock” on state pension increases, or maintaining tight regulatory controls on new housing construction, or even pulling the UK out of the European Union when most people under 30 want to stay

Ben Chu
Wednesday 20 July 2016 11:15 BST
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Millennials have paid £44,000 more rent than the baby boomers by the time they hit 30
Millennials have paid £44,000 more rent than the baby boomers by the time they hit 30 (Getty)

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Louise Thomas

Louise Thomas

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Are you in your twenties? If so, here are some questions for you: would you surrender your cheap flight to Ibiza in exchange for a permanent job contract? Would you give up eating at your favourite rodizio restaurant if it meant you could wipe out your student debt? Would you rather have Pokémon Go or a home of your own?

Are these stupid questions? Yes and no.

One of the arguments sometimes advanced to rebut the idea that young people are getting a rough time of it economically relative to previous generations is that technology is moving fast and in a way that is not being captured by official statistics and income measures.

As the Resolution Foundation showed earlier this week, average incomes of people in their twenties today are lower, adjusted for inflation, than they were for people in their twenties in the previous generation – the first time there has not been a generational increase in living standards since the dawn of the 20th century. But how seriously should we treat such comparisons? Some 30 years ago there were no smartphones, no internet, no MP3s, no budget airlines, no flat-screen TVs, (virtually) no Brazilian restaurants in the UK and no late licensing for pubs.

Inflation is a measure of changes in the prices of goods and services. But what if certain goods and services simply did not exist in the past? How can one compare the standards of living of people in one generation with those of previous generation using a standard inflation adjustment?

There is something in this argument. Eric Beinhocker, director of the Institute for New Economic Thinking, has suggested we should think about humankind’s development since the Stone Age not so much in terms of rising money incomes but as the development of ever more “solutions to human problems”. There are certainly more “solutions” around today that are widely available to young people than there were for previous generations – smartphones, social media platforms, new medicines, an array of quality new restaurants and, yes, travel opportunities. Yet we should also be wary of this approach to measuring inter-generational welfare.

Psychological studies show that expectations are important to a person’s sense of well-being – almost as important, in fact, as their actual material circumstances. If people had expected to be somewhere in their life but are not, they tend to feel depressed. This expectations prism is particularly relevant to the situation that Millennials (those born between 1982 and 2000) find themselves in. This is a generation that expected to be able to buy their own homes, to have relatively secure employment, to enjoy decent workplace pensions and to receive incomes that were higher than that of their parents at a similar stage in their working lives (just like their parents had higher incomes than their parents). But many find they can have none of these things.

Perhaps some older readers might be tempted to say in response that no one is entitled to anything in this life and that young people should simply adjust their expectations downwards. That would be rather rich considering the extent to which the expectations of the over-sixties are being assiduously catered to by politicians, whether through imposing a generous “triple lock” on state pension increases, or maintaining tight regulatory controls on new housing construction, or even pulling the UK out of the European Union when most people under 30 want to stay.

This “never had it so good” argument also overlooks the intrinsic value of some of the things that millennials feel they are lacking. A home is not just a financial asset that rises in value almost every year, but a place and stake in the community. A permanent job (with paid holiday) is not just a source of income, but delivers a sense of self-respect to the individual. To point out that young people have Snapchat and Ryanair does not address this sense of something important being missing.

There are, certainly, trade-offs to be made. Some expectations are unrealistic. The era of expanding social mobility, through which the baby boomer generation lived, was probably a one-off. The shape of the economy changed radically thanks to the rise of the services economy. There was an explosion in the supply of higher-paid white-collar jobs and more “room at the top”. That great economic opening up can’t happen every generation.

It’s also a fantasy to believe – as many on the left do – that it’s economically, educationally or politically sustainable to return to an era of free university tuition for all when almost half of young people are now going into higher education (up from 5 per cent in 1960). There is no inalienable right for each generation to enjoy higher inflation-adjusted incomes than the previous one. That progression depends on our national productivity (economic output per hour worked) increasing year after year; Britain’s productivity has been worryingly stagnant for the past decade.

Yet, within those constraints, there are clear injustices in how our political system divides up the cake of our prosperity. And our political system should be providing better economic opportunities and more security to large swathes of the millennial generation.

The Institute for Fiscal Studies reported today that average incomes have finally crawled above their levels before the financial cataclysm of 2008. But beware averages. For workers in their twenties, typical incomes are still a brutal 7 per cent lower than they were way back in 2007.

Sure, young people today have the novel delights of Pokémon Go. But they also have very good reason to feel hard done by.

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