Mapping millennials’ living standards

Intergenerational progress – the idea that each successive cohort should have higher living standards than predecessors at the same age – has slowed down markedly for today’s young adults. This puts their experience in stark contrast to the rapid cohort-on-cohort improvements in standards of living up until those born in the 1970s.

Because many people spend their whole lives in the same part of the country and inter-regional mobility rates have been falling, it is important to assess these intergenerational comparisons through the lens of place. The concerns that young people have about their living standards prospects reflect how they compare themselves both to peers across the country, and to the experiences of older generations in the communities in which they live.

This briefing note examines how young adults across the nations and regions of the United Kingdom are faring in terms of their pay, employment, educational attainment, home ownership and housing costs, compared to previous generations at the same age. In particular, we focus on how those born between 1986 and 1990 compare with those born between 1971 and 75.

Our approach shines a light on the intersection between different standards of living for young adults in different parts of the country today, and the degree to which the fortunes of young adults have been improving in each region over the course of the past two decades or so. In doing so we form a rounded picture of how it feels to be a young adult in different parts of Britain. Some themes that emerge are:

• The West Midlands and Yorkshire and the Humber are regions where young adults might feel most pessimistic about their prospects in the labour market. The 1986-90 cohort of millennials in the West Midlands and Yorkshire not only experience worse labour market outcomes in their late 20s compared to their peers in other regions today, but also find themselves with little or no generational progress on the 1971-75 cohort.
• Millennials everywhere face housing cost pressures and struggle to get on the housing ladder. London has the lowest home ownership rates for those born 1986-90 when in their late 20s and the biggest home ownership decline since the 1971-75 cohort were that age. But the decline in the West Midlands was almost as big. As a result, young adults’ home ownership rates in the West Midlands are now below the national average.
• Millennials in the North East have experienced the largest cohort-on-cohort labour market improvements. The 1986-90 cohort in the North East still has earnings, employment rates and degree attainment rates below the national average. But the North East has experienced the fastest intergenerational improvements since the 1971-75 cohort was in their late 20s on all three measures. This progress reflects the fact that while there is further room for improvement in its labour market, the gap between the North East and leading regions like the South East has narrowed.

Looking at the interaction between current living standards and intergenerational progress from a regional perspective furthers our understanding of how people may think about their situation, and what expectations they form. The big differences across the country in how young people have fared compared to their predecessors point to the need for policy makers to recognise and address different regional challenges for young adults.