An intergenerational audit for the UK 2023

New research published today by the Resolution Foundation, funded by the ESRC Connecting Generations research programme, has found that that, unlike in the US, welcome improvements to millennials’ living standards in recent years in the UK have not gone far enough to close the long-standing generational gaps.

This fifth Intergenerational Audit for the UK provides a comprehensive assessment of how living standards have changed for younger generations, in an attempt to shed some light on whether millennials in the UK have experienced a comparable improvement in their economic fortunes as their US counterparts.

Key findings

• Millennials have made progress on employment in the labour market, but pay progression remains close to zero. In fact, younger millennials, born in the late 1980s, earned on average 8 per cent less at age 30 than members of generation X, born 10 years prior, at the same age.

• Graduate pay, in particular, has underperformed since the financial crisis. The typical weekly pay of graduates aged 30-34 has fallen by 16 per cent between 2007 and 2023, while the typical weekly of non-graduates is down by 6 per cent.

• UK millennials have seen modest improvements in income progress, but it falls short of the catch-up seen by their counterparts in the US. First, income growth was higher in the US: between 2007 and 2021, median household incomes in the US grew by 17 per cent compared to just 2 per cent in the UK. Second, recent income growth has been more favourable to young people in the US.

• Policy changes made by successive governments have acted as a drag on incomes in the UK. The personal tax and benefit changes implemented since 2010 have left non-pensioners more than £2,200 a year worse off on average, while pensioners are less than £200 a year worse off.

• Home ownership rates among younger cohorts have fallen sharply in the UK. Between 1986 and 2021, home ownership rates for households headed by 30-34-year-olds had fallen by over 20 percentage points in the UK, compared to just 3 percentage points in the US.

• Home ownership rates among those in their early thirties have started to improve in recent years in both the UK and the US. Looking ahead, millennials are expected to become a generation of home owners (where 50 per cent own their own home), but this looks set to take them more than five years longer than it did in their parents’ generation.

• A new higher-interest environment provides some opportunities for younger generations, making it easier to build up larger defined contribution (DC) pension savings. Higher rates could boost DC pension pots of those born between 1991-95 by around £18,000 more in their at age 60.

• But the decline in the availability of generous defined benefit (DB) pension schemes means that future cohorts will retire with less pension wealth than the generations that came before them. Millennials born in the early 1980s could reach age 60 with around £45,000 less pension wealth than the youngest baby boomers (born between 1961-65).

Connecting Generations member, Sophie Hale, principal economist at the Resolution Foundation, said: “Young people across advanced economies were hit by the financial crisis, putting a stop to decades of progress. Fifteen years on, this ‘crisis cohort’ are no longer young. And while many US millennials have bounced back, their counterparts in Britain are still wearing economic scars as they approach middle age.”

Watch the launch event 'Perma-crisis people: The divergent economic prospects between generations' available from 9:30am on Monday 13 November.



Read the full report 'An intergenerational audit for the UK', by Molly Broome, Sophie Hale, Cara Pacitti, Adam Corlett, and Charlie McCurdy.


This work was supported by ESRC grant number ES/W002116/1 Connecting Generations Centre is a partner institute of Connecting Generations, led by Professor Jane Falkingham CBE at the University of Southampton. Connecting Generations aims to understand intergenerational connectivity, producing novel science that informs policy debate.


For more information on this report, contact Rebecca Hawkes at the Resolution Foundation.

Posted 13/11/2023 08:58