Millennials who entered the job market during the financial crisis are still suffering “scarring” effects on their earnings as they enter their mid-30s, making it even harder for them to cope with the economic pressures of having a family, a leading thinktank has warned. Their pay has suffered by far the biggest squeeze of any…
Millennials who entered the job market during the financial crisis are still suffering “scarring” effects on their earnings as they enter their mid-30s, making it even harder for them to cope with the economic pressures of having a family, a leading thinktank has warned.
Their pay has suffered by far the biggest squeeze of any age group since the 2008 crash, according toa study by the Resolution Foundation. While the wages of the over-50s have recovered to levels above those seen a decade ago, it found the typical salary for workers in their 30s was still 7% below its pre-crisis peak last year.
As young workers in their 20s during the financial crisis, millennials were by far the worst affected as salaries failed to keep up with inflation. Their pay fell by 11% from 2009 to 2014 before recovering some lost ground after that.
The thinktank said there were signs that this pay blight had left long-lasting “scarring” effects on their earnings. “This risks making it even harder to cope with the income pressures they are likely to be facing in their 30s – including raising children,” the report said.
The findings are part of the thinktank’s latestEarnings Outlook, which shows that, after the unwelcome return ofan across-the-board fallin inflation-linked pay in 2017, earnings growth started to recover early last year. “It is set to strengthen in early 2019 towards 1.5%, as inflation eases and nominal pay growth remains above 3%. This would represent the strongest inflation-adjusted pay growth since the EU referendum, though still well below the pre-crisis average of 2.1%,” the report says.
A forecast for this year showed that every generation was likely to benefit from increases in inflation-adjusted pay, though it was likely that millennials would continue to lag behind older and younger workers.
Official figures and surveys show that wage rises are greatest for those who move jobs compared with workers who stay with the same employer. Nye Cominetti, an analyst at the Resolution Foundation, said: “For workers of all ages looking for stronger pay growth, the outlook does offer clear evidence-based advice – ditch your current employer and enjoy a 4% ‘disloyalty bonus’.”
People who did not change jobs last year saw real pay growth of only 0.5%, compared with 4.5% for those who moved. Workers in their 30s and 40s tend to move jobs around half as frequently as people in their 20s. Just 0.7% of workers in their 30s and 40s voluntarily moved jobs last year.