Mind the generation gap

Article dated: 20 March 2012

A newspaper investigation concludes that for the first time in 50 years, young people can no longer expect to be better off than their parents. baby with grandparents

In the days leading up to Chancellor George Osborne's 2012 budget speech, correspondents for the Financial Times (FT) analysed public data available through the UK Data Archive's Economic and Social Data Service to discover that "the real disposable household incomes of people in their 20s have stagnated over the past 10 years just as older households are capturing a much greater share of the nation’s income and wealth."

The FT analysis also shows that young people in their 20s are now seeing their grandparents' generation living a higher standard than they themselves can afford. According to the authors, "median disposable income for the baby-boomer generation born in the five years either side of 1950 is over 40 per cent higher than those at the same age born 20 years earlier. It is more than 80 per cent higher than those born 30 years earlier."

They point out that the data analysed does not take into account housing costs or accumulated wealth, which might show an even more dramatic gap in living standards.

Meanwhile, older generations continue to benefit from more generous pension terms while being protected from recent rises in national insurance contributions, student tuition fees, and cuts in child benefits and tax credits.

Carl Emmerson of the Institute for Fiscal Studies responded to the results by saying, "The government has made working-age benefits less generous and pension-age benefits more generous and this gap will grow over time."

Ashley Seager, co-founder of the Intergenerational Foundation, said, "These figures demonstrate that generational imbalances are becoming so serious that they risk alienating the younger generation. The chancellor must use the budget to address this intergenerational unfairness."

Read the complete articles, including notes on the data analysis, at the links below.