Young adults have “borne the brunt of the recession” with their wages and job chances hit far harder than older generations, an economic think tank has said.
Among 22-30-year-olds, household incomes fell 13% from 2007/8 to 2012/13, wages by 15% and employment by four points, the Institute of Fiscal Studies (IFS) said.
By contrast over the same period, those aged 31 to 59 saw income fall by 7%, pay by 6% and employment remain stable.
The over-60s saw almost no impact on those measures.
The gaps would have been wider but for the 25% of young adults still living with their parents, the IFS said.
Its conclusions were based on the most recent figures from the Government’s Households Below Average Income data as part of work funded by the Joseph Rowntree Foundation (JRF) social research charity.
Among other conclusions were that there was “no clear north-south divide” in where the recession hit hardest – with a wide spread in falls in median income from 8% in Northern Ireland to 2% in the East Midlands.
Income inequality was “barely changed” over the year to 2012-13, it said.
The IFS noted that record lower interest rates and real-terms falls in private rents had worked in the favour of young people’s finances but that home ownership continued to plummet – spelling further costs for a generation that will increasingly live in rented homes.
Only 21% of people born in the mid 1980s had bought their own place by the age of 25 – compared with 34% of those a decade earlier and 45% born in the mid-1960s, it said.
IFS research economist Jonathan Cribb said: “Pay, employment and incomes have all been hit hardest for those in their 20s. A crucial question is whether this difficult start will do lasting damage to their employment and earnings prospects.”
JRF head of poverty research Chris Goulden said: “This research provides further proof that a shortage of affordable homes and the high cost of renting or buying a home is pushing hundreds of thousands more people into absolute poverty: 600,000 more people have found out what life is like below the poverty line after paying their housing costs.
“Over the past year young people aged between 22-30 in particular have fared the worst, seeing the sharpest rise of those now living in poverty. This is in contrast to pensioners, who the IFS say face relatively favourable conditions. The progress in reducing pensioner poverty shows what can be done with sustained effort – a principle that must apply across all age groups.
“The IFS report makes clear the worst is yet to come for struggling households: this year’s figures do not factor in the large-scale welfare cuts introduced from April 2013. Even at a time where resources are limited, measures can be taken to reduce the hardship now facing almost a quarter of households.
“We need a comprehensive strategy and sufficient political will to get to grips with poverty. That means addressing low pay, the high cost of essentials, such as housing and childcare, and reform to the tax and benefits system to ensure work is a route out of poverty.”
Labour Treasury spokeswoman Catherine McKinnell said: “While David Cameron denies there is a cost-of-living crisis, these figures show people have seen a substantial fall in their income since 2010.
“The IFS’s research shows that young people have been hit particularly hard over the last few years.
“Labour will act by boosting apprenticeships and making sure young people who don’t have the skills they need to get a job are in training, not on benefits.
“Our jobs guarantee will also ensure there is a paid starter job for every young person out of work for over a year.”
A Treasury aide said: “This shows just how hard Labour’s great recession hit young people and why it’s vital we keep working through our long-term economic plan which is cutting the deficit, creating jobs and equipping people with the skills they need for the future.”