The Millennial Generation Is Stagnant And Older People Are Part

always these debates that go on. They're like, oh, if you're born in one or nine, eight, whatever it is, and I always kind of find that to be a little um meaningless. The definition of millennial in my view is did you have Facebook when you were in college? Um?

I didn't. But it feels to me that that's important, not just from a time perspective, but because that's really sort of defining different in how people live and how people inter act, and how people find partners and how people find friends, and that's such a crucial distinction, the sort of pre Facebook crowd and afterwards that I think

it's the perfect definition. Okay, So I actually did have Facebook in college, more because we were one of the first colleges to get it than being particularly younger than you. But I guess that makes me a millennial in some senses, so you know, as a card carrying millennial. One of the things I followed very closely is the idea of intergenerational conflict, so the idea that young people are angry with old people over certain trends happening in the economy.

And you've been following this closely as well. Yeah, it's a huge topic, and you really love this topic though you love anything relating to intergenerational warfare, or maybe warfare is too strong, but at least conflict. You get very excited about it. I do, so. I guess the thing that um got me most excited about it was when I first wrote about it. Gosh, I think it was

back in two thousand nine. I actually did a post under the headline kill the Old, and it was kind of, well, it was kind of tongue in cheek, but it made a serious point, which was that in the aftermath of the financial crisis, the younger generation had really been given a raw deal by the older generations, so we were kind of paying for a lot of their excesses. We had the housing boom, which made getting a mortgage much

tougher for younger people. We had pension schemes that were now underfunded, which young people have to pay for and they don't get to enjoy the benefits. I could go on and on and on, but instead of doing that, let's bring in our guest for today. She is Laura Gardner. She's a senior research and policy analyst over at the Resolution Foundation, which is a think tank that looks into a living standards, especially for poorer earners, and she actually

wrote a really, really good report on this topic. It's called The Stagnation Generation The Case for Renewing the Intergenerational Contract. So it's slightly more sedate title than Kill the Old, but maybe there's some of that in there. Hiler, thanks

for joining us. So maybe to begin, you could walk us through why you decided to focus on intergenerational conflict or tension specifically, because the think tank doesn't necessarily always look at this, right, you're looking usually at improving living standards for the lowest earners in the UK. That's absolutely right.

And the reason why we've we've taken this new focus on inter generational issues is because in the COT is because in the course of a lot of our analysis of different living standards outcomes in the UK, these kind of intergenerational concerns really started coming through. So, for example, we spend an awful lot of time looking at what's going on in the labor market in the UK, as as that's such a big determinant of household living standards.

And if you look at the pay squeeze, really long and deep pay squeeze we've had since two thousand and nine in the UK, you immediately find that young people, those in their twenties had a much deeper pay squeeze than than older workers, so they seem to bear the

brunt of the paypals in the downturn. And then if you look, say at the housing market, and you look at how much people are spending on private rent and falling rates of homeownership, you see that very much hitting young people who are spending the highest proportions of their

incomes on their housing costs. And then you'd say you might look at pensions in the workplace, and and and who's in receipt of or who's set to get what we call kind of define benefit or final salary pension schemes in the UK, which is when you kind of got a lifetime income promised. These these kind of really gold plated mentions really a thing in the past. I think only three of our fit See one hundreds, which is kind of our top one hundred companies still offer

them to new members. So so those are kind of three examples of where you might look across across public policy, across labor market, across the housing market and see things looking to tip away from the young in favor of older generations. But those are very snapshot pictures. We're not comparing like with like. We're not comparing young people today with those with young people in the same age thirty

years ago. So we wanted to get underneath these apparent concerns and do a really rigorous assessment of intergenerational furnace over the life cause, which led to this this Stagnation Generation Report and the long eighteen month project we are doing off the back of it. So what did you learn when you took this deeper look as opposed to just comparing young people today verse the older generation today?

What did you learn are some key differences in how the economy was structure today versus when the order generation were themselves young. If we if we go back to the labor market for example, and what's what's going on with pay. So we normally expect, in the long march of history, each generation to earn more than the one before it, because usually earnings growth is faster than growth

in prices is fast than inflation. You'd expect each generation in a growing economy to do better than the one before. And that's what happened from the from the silent generation to the Baby Beamers and the baby Beamers to Generation X. Each generation earns more than the last as a big step up. And we're a bit different to you, Joe, because we we we do decide to stick a year

definition on the millennials. We look at the we look at those born between one and two thousand in the UK as a millennials, and I still I still don't qualify as a millennial. I think I think it fits quite well with the Facebook deaf and iss and you suggested, actually, when when I think about Facebook, hit hit universities in the UK slightly later, but I remember having it myself,

so I think it's just about works. Um. So if you look at the millennials and you compare them to Generation X, that those born in the fifteen years before them. In their sort of their first ten years of their career, so far, they've failed to earn more than Generation X. They've actually earned a bit less. We estimate about eight

thousand pounds less over the course of their twenties. So so on this like for like comparison, we do indeed have suggestions that the millennials could be the first generation to not significantly exceed their predecessors in terms of earnings. So that's one example, and then I just mentioned one

more from the housing market, which is even starker. So we've looked at declining rates of home ownership across the generations, and the peak generation for homeownership in the UK was the Baby Beamers, those born between By the age of thirty, about two thirds of Baby Boomers own their own home. Now that fell a bit for generation next after them, but for the Millennials it's kind of fallen off a cliff. So by the age of thirty, only about thirty millennials

own their own home in the UK. So we've had this massive decline in home ownership, which is on a like for like basis, means millennials are much more likely to be stuck in the private rented sector, unable to save up for those house deposits and paying far more in private rent as a result, which has shot up in recent years. So those are kind of two examples of of of where this kind of generational conflict really comes through when you go into the kind of deep

dive into the data and look at stuff like for like. So, how much of those sorts of trends have to do with the financial crisis and to what degree do we expect that they might get better as we get further and further away from two thousand eight. The financial crisis is definitely a big factor in this, particularly on the

pace side. The reason why millennials have had or a large part of the reason why millennials have had such a bad time in their twenties is because they had the unfortunate experience of graduating into an enormous pay squeeds into an enormous recession. But actually, we think there are

signs that this isn't all about the financial crisis. So even if we look at those early millennials that were entering the labor market in the mid two thousand's, so before the crisis, when things are actually looking pretty good, they were still failing to make earnings gains on the

sort of cohorts fifteen years before them. So some of this kind of stagnation picture it seems to predate the financial crisis, and so when we think about the future, obviously we'd expect a lot of the effects of the financial crisis to unwind incoming years, although the UK economy looks like it might be about to experience a new wave of uncertainty in relation to the decision to leave the EU, so some of those effects might be prolonged.

But because some of the stagnation appears to have predated the crisis, we're concerned that without kind of detailed policy attention, this isn't just going to be an early career blip. It could be something that blights the millennials throughout their working lives. And that's one of the reasons for kind of our elevation of this issue and our big project on it. So let's get to the policy question. You mentioned that we the economy may need detailed policy attention

on these issues. What policies were put in place or what decisions were made that, in your view, contributed to this um downturn in various financial and economic measures. There's definitely no one thing, and and it should be said that some of the challenges around intergenerational furnace aren't We don't necessarily point the finger at policy. We might point

to a demographics. So a lot of the challenges in our welfare states, our economies are labor markets, comes from the fact that some birth cohorts are just much bigger than others. And the reason why the baby beamers are called the baby beam is this because there's a lot of them. There's this massive birth spike in the post war years um and and that drives a lot of the challenge. So it's very difficult for policy to deal

with those uneven cohort sizes. So we do need to look at the role of demographics and how we can better kind of plan and plan for future welfare spending in light of that. But there are also other policy choices in the UK that have contributed to this picture.

So in the labor market, we might point to our consistent failure in the UK, not just pointing the finger at one specific government this is a decades long thing, but our consistent failure to offer a solid, dependable career route for the fifty of young people who don't who decided not to go to university. I think I've heard similar messages from the u S as well. So skills

for non graduates is a huge failing house building. For years and years and decades we've failed to build enough houses, and which is one of the reasons why the generational housing crisis I've described exists on pensions. Decisions made to UM insufficiently fund these final salary pension schemes in the nine eighties and nine nineties have led to huge deficits now which kind of current generations are working to pay off,

and on the welfare state. In the austerity we've had in the UK in recent years, UM there's been a very clear decision to protect pension of benefits and bring

in quite big cuts to working age benefits. So there's all sorts of areas where public policy does seem to have exacerbated rather than ameliorated, the hand dealt by demographics, if you like, Well, what's the appetite to introduce new policies that might tip the balance back in favor of a younger generation, and particularly given that baby boomers in particular still forms such a huge, huge part of the population, and it seems if we're talking about democracies and they

have the upper hand in terms of introducing new rules and policies that could change things. Well, I mean, that's a that's a really important question to ask. And the thing that we often hear is, um, Okay, we get your star's your your charts are excellent. We understand the problem you're um, you're describing, but there's there's nothing we can do about it because of exactly the reasons you suggest.

The baby boomers there's lots of them, and they're they're they're quite good at turning out to the polling stations when we have elections. So so it's kind of painted as a politically intractable issue and we don't think that's true. We don't um. You sort of use the word war at the beginning of this piece, and I actually we don't think that that's how different generations really see each other in society. We think if you look at transfers in the fact, within the family, you can see generations

with huge willingness to help each other out. And even if you look at really tough questions like attitudes to house building in the UK, we're seeing attitudes shifting. So traditionally the baby boomers have been very anti building houses in their local area because it might affect the value of their own assets. But even in kind of four four year period between twenty and fourteen, their appetite for local house building doubled, so it went from about a utra of them saying they were up to it to

over half and that's just over four years. So I think as this crisis becomes more and more stark, public attitudes are definitely shifting towards a renewed look at the social contract that that deals a better hand to all generations. In turn, so for the younger generation that means a better chance to get on the housing ladder and a better chance a secure career. But there's also things we need to do for the older generation, like fix our

broken social care system. So we want to look kind of across generations in the round, and we can see evidence that there's attitudes in society shifting towards rectifying some of these balances. Because at the end of the day, no granny wants to watch their their grandchild struggle in the labor market, struggle to get on the housing ladder. And I think that that metaphor stretches across society as

a whole. I want to talk a little bit further about the housing situation, because I mean, it's also the case in the US that homeownership braids are on the decline and there for a lot of young people and even young professionals, but you know, tugging here in New York City, the idea of home ownership just seems completely

out of reach for people. It's also the case, and various economists have talked about it, that the unequal distribution of housing wealth is perhaps one of the biggest contributors to inequality overall, and that housing sort of tells the entire story. Um, how did this happen? Like when you sort of identify, like when homeownership was this thing that sort of everybody could access if they had a job, to this thing that really seemed out of reach for

a lot of people. Was there turning point or was there just sort of this slow trend of higher and higher house prices squeezing more and more people out. It's definitely there were definitely some turning points, and I think it's certainly not the baby Beaver's fault. They just they just happened to come along at just the right time on this kind of housing journey. So how am ownership started taking off in the UK in the nineties sixties,

accelerated in the seventies and eighties. Um, the ownership took off, but is didn't really take off, so the value of those assets that the baby bimssic at their hands on until the nineties and then particularly the early two thousands. So baby memors got into the housing market through the sixties, seventies and eighties, lots of them got themselves houses, and then a few decades later, the value of those assets absolutely shot through the roof, so suddenly they're a lot wealthier.

And then, um, the reason why the value of those assets were shooting through the roof was because we weren't building enough home so the product was becoming more scarce.

And then the kind of third phase in that journey was what happened around the financial crisis in this country, which is that we as reflecting on many of the causes of the financial crisis, we created much stricter criteria for mortgage lending, so the deposit requirements to get on the housing ladder became much much bigger, which meant they're not only our houses are lot more expensive, but that young people looking to buy a house needs to get

a much bigger proportion of that cost together in order to be able to get a mortgage and and get into her home ownership themselves. So those kind of phases of development in the housing market in the UK have all been kind of timed just right for the baby Boomers and and really turned quite badly for the millennials. It sort of speaks to the luck involved in accumulating wealth.

Right if you're around at the right place at the right time, you can find yourself with you know, a pretty normal blue collar job, but owning two properties that eventually shoot up in wealth, and then suddenly you've kind of got it made. But they don't seem to be obvious policy solutions to that sort of generational luck. There aren't, but there are there are. There are very clear policy

decisions kind of underlying that luck. So I would say it's I would say the baby boomers were lucky and being part of a cohort that kind of experience all these things, But it wasn't an accident. There were policy decisions in this country to not continue the levels of house building we had in the nineteen fifties and sixties, for example, which which underpinned a lot of the subsequent trends I described. So, yes, it's it's messy. There's a

lot of luck involved. The generations involved were not necessarily the masters of their own destiny and shouldn't be blamed

for what's happened. But we should look very critically at the public policy choices that kind of led to these outcomes, because it wasn't just an accident um that there were some very clear decisions about what we do in the housing market, what are planning policy does, what what we how we controlled by the rents and things like that that have kind of led to the housing situation young

people face today. So, Laura, you mentioned Brexit briefly, Let's talk about the voting outcome there, because that seemed a really clear example of a generational divide. Was that with younger people usually voting to stay in the European Union and older people voting to get out. Was that a reflection of the different economic experiences between the generations. I think it's a sort of understanding the reasons behind the Brexit voters, Like the million dollar question in the UK

the moment. But you're right to highlight the very very clear differences by age, and I think actually the differences between different age groups are bigger than the differences between different geographies kind of different um political affiliations. It's it's one of the clearest device you can see when when analyzing the Brexit vote. UM. I think to some extent it reflects the fact that older generations are what we might say excluded and sorry insulated from the consequences of Brexit.

So if they're out of the labor market, if they own their own homes already, then even if there is some economic term or to come, is kind of unlikely to affect them because they're they're not as actively engaged in the economy as younger people. But there's also a lot of non economic reasons, which which others have talked about much more eloquently than me, that have driven this.

But our kind of position on this on the Brexit vote is that it's it's happened now and the UK is in the process of charting its course through leaving the EU, and we need to make the best job of that we can. But we also need to reflect on the concerns of those who might feel that their voices haven't been heard, largely the younger generations, and and look at what we can do to to reunite the country,

if you like, reunite our divided nation. And I think addressing some of the intergenerational challenges I've highlighted is a crucial challenge for the new government and the new Prime Minister if she wants to heal some of the divides that the whole process of going through the referendum has

opened up. And it was really really welcome in our new prime minister to reason Maze first couple of speeches as Prime Minister, or just before she she she won the contest, she she highlighted the intergenerational challenges I've been

talking about more than once. So there's I think I've talked about, you know, maybe attitude softening and maybe they're being the possibility for policy change in this area, and the fact that the new government has put the issue front and center is a signal that we think that the time for addressing these intergenerational challenges in the UK has come. So the Brexit vote creates a challenge but also an opportunity to think about how we can bring

the generations back together. Yeah, it does seem as though there's been a little bit of a shift on all sides of many um many spots on the political spectrum, just sort of questioning the sort of particular strand of sort of free market financial capitalism that we've seen in recent years. Obviously everyone has different critiques, but it feels um, you know, listening to Theresa May, that people are questioning some of the orthodoxies for the last several years. That's

absolutely right, I think. I think having um at the point in which we're going through such a huge political change as leaving the EU, is it's absolutely right to to think critically about the model we have, the economic model, of the political model, and and and who that might be working for and who it might not be. So so a lot of that comes through the generational debate.

But we've also heard Thereason May talk a lot in these first in this first month or so about looking at industrial strategy being a real big pillar of her economic policy. Now what that she means. It could be a number of different things, but it's not something that we've been talking about in this country for years or even decades, and it was an idea that was very much out of voke. So there's kind of interventionist approached

the economy. That industrial strategy might signify. A real appetite to do something in the housing market that serves the needs of young, younger generations. To kind of actively intervene as a government rather than letting market forces play out is definitely coming through in the in the rhetoric of the new government at least, and we're we're waiting to see kind of what's for what follows that in terms of concrete policy decisions. Laura, thanks so much for joining

us today. My pleasure. Well, Tracy, did that satisfy your hunger for intergenerational warfare and conflict? Uh? Not really, to be honest. So I think I take issue with the notion that generations are softening in terms of their um dislike for each other or dislike for policies that would

help the next generation down. So I mean, having lived in London and having rented from a baby boomer landlord with multiple properties, I just don't see any massive change in attitude coming where suddenly the baby boomer generation says, oh wait, you know, we've really kind of cost you guys a lot and now we're gonna change everything up.

But I don't know. I don't have kids. Uh maybe people feel differently about it once they have children, But I think when it just comes to their own self interest, it's really difficult to surmount that for something intangible like the future the benefits of the future generation In so, you're condemning an entire generation because of one landlord you didn't like. Yeah, is that what I'm taking evidence based?

But in all seriousness, I think this report is really important and I feel like it's going to be a major topic for a long time to come. I think, you know, obviously Laura expressed some optimism about change, but these issues with who is owed what when it comes to pensions and just how expensive housing has gotten for a lot of people, they strike me as gigantic problems. Whether it's the direct result of conflict or just a

cumulative policy decisions overall. Uh, they seem to be enormous issues, right, And there's an intractable human problem to this as well, which is that everyone wants to get more out of the system than they put in. Right, that's just kind of human nature. So it seems like it's going to be a really really tough problem to solve of and uh, I have a feeling economists are going to be looking at this as sort of evidence of self interest in

various other things for years. And it's not just that people want more, because to me, it's that a people want more, but be they're always measuring themselves against other people at the same time. So even if they get more but someone else gets even more, that might be unsatisfying. And people are always measuring themselves against what they expect in life. So if you expected a certain pension, or if you expected to be able to make a certain amount, even if you get more but it wasn't as much

as you expected, you might be unhappy. So there's all kinds of sort of behavioral elements taking place, I think, and in terms of how our minds work, that make these problems harder to solve as well. Right, it's all relative. Um on that very cheerful notes, Very great. Yeah, but that was fun, fun conversation. All right, thanks everyone for listening. I'm Tracey Alloy. You can follow me on Twitter at

Tracy Halloway and I'm Joseph wi Isn't though. You can follow me on Twitter at the stalwart until next