Gen Y actually might be poorer than their parents

More spending and less saving means no increase in wealth for the young in 25 years.

One of the most notable aspects of Britain's austerity drive is the generational inequality with which it has been applied. The best example of that is the difference in the government's approach to pre- and post-retirement benefits. The former have been put in a double bind to keep them low, rising at just 1 per cent a year or the rate of increase in CPI, whichever is less. The latter have been "triple-locked", ensuring that they rise at the higher of inflation, wage inflation, or 2.5 per cent.

There's a real reason to complain about that, given that young people have already taken an enormous hit with soaring youth unemployment, a tripling of tuition fees and the removal of EMA. Not to mention the raising of the minimum age at which you are no longer expected to houseshare from 25 to 35, the below-inflation increases to the minimum wage, and the increase in the pensionable age in the future.

But occasionally, the concerns crystallise into a specific phrasing: "this generation will be the first to be poorer than their parents." That is something I have real trouble with, for the simple fact that most of the history of the last 30 years—or 20, or 40, or whatever we take a generational difference to be—there has been growth. Take a look:

Obviously, GDP is not equivalent to personal income; and as I've written elsewhere, for it to be a real comparison, we'd have to take into account population growth, wage stagnation, and issues of distribution.

Nonetheless, by the standard measure, the British economy is over twice the size it was when my parents were my age. There would need to have been an enormous transfer of wealth from the young to the old to overcome the prima facie belief that I am richer than they were. Indeed, you don't have to look far to realise why that might be the case. In 1982, you literally could not have bought—no matter how rich you were—the magic slab of glass and aluminium that connects to all the world's knowledge that I keep in my pocket and moan when I forget to charge it. Technology goes a long way.

But it seems that that prima facie impression really might fall apart if you look into the data. A new study, looking into the American situation, gives us reason to doubt it. The researchers, from the Urban Institute, write that:

Average household wealth approximately doubled from 1983 to 2010, and average incomes rose similarly. For many, the American dream of working hard, saving more, and becoming wealthier than one’s parents holds true. Unless you’re under 40.

Today, those in Gen X and Gen Y have accumulated less wealth than their parents did at that age over a quarter-century ago. Their average wealth in 2010 was 7 percent below that of those in their 20s and 30s in 1983.

In the US, the net worth of those aged 47 or older is roughly double that of someone the same age 27 years earlier. But the net wealth of someone aged less than thirty is no greater than it was 25 years ago.

It's important to note that this is using wealth in the strictest sense possible: net value of owned assets (though it does account for inflation). It's not a discussion of the relative size of the social safety net, or the difference between the quality of consumer goods now and then. As a result, the main driver of the discrepancy is spending and borrowing habits. If younger people today are forced to spend a higher proportion of their income—or borrow even more—than they did 25 years ago, that will show up as a loss.

As, indeed, it does. The authors attribute the difference to the "Great Recession", and particularly the housing crash, which had a bigger impact on net wealth the more of a mortgage you had outstanding. And for those of us too young in 2008 to own a home, the fact that we are now locked out the housing market through crippling deposit requirements also impacts on our wealth, as we are forced to continue renting rather than building equity.

Intergenerational transfers mean that that's a trend which can't last forever. Eventually, old people die. It's kind of a thing they've got going. But even that means that young people are only likely to amass a significant chunk of wealth when their parents die, which may be quite late in life indeed. The impoverished 30-year-old is unlikely to be satisfied by that.

But the really interesting thing is that the young were falling behind even before 2008. The authors explain why:

Factors likely include their reduced job prospects, lower employment rate, and lack of educational attainment that was higher than previous generations.

As for possible solutions, they suggest increasing the amount spent on education, boosting state pension contributions for the young, and subsidising new home-ownership to a much greater degree.

To be clear, I'm not sure if the findings hold for the UK; but many of the same trends are at play, and are exacerbated by the imposition of austerity targeted mainly at programmes used by the young. It may actually be the case that the young of today actually are poorer than their parents.

Some young people—well, Adam and the Ants—in 1981. Photograph: Getty Images

Alex Hern is a technology reporter for the Guardian. He was formerly staff writer at the New Statesman. You should follow Alex on Twitter.

Photo: Getty
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The NHS's sustainability is under threat if more isn't done to look after its staff

More work is needed to develop the health service's most precious resource.

As the NHS nears its 70th anniversary, the time is ripe for a workforce rescue plan. Staffing worries, even more than funding pressures, are the biggest cause of concern for NHS trust leaders. There are not enough trained health workers in the UK to meet today’s needs, let alone those of the future.

Demands on hospitals, mental health and community trusts, and ambulance services are growing. More patients need treatment. Increasingly, they require complex care, with specialist expertise. This is not just about numbers. We need a clinical workforce that is skilled and equipped to work in new ways to deal with the changing needs of the population it serves. 

That means improving the supply of people coming to work for the NHS, and doing more to develop and motivate them so they want to stay. These problems are not new but the scale of the challenge has reached a tipping point which threatens the future sustainability of the NHS.

Ministers rightly point out that the NHS in England has more clinical staff than ever before, but numbers have not kept pace with rising demand. The official "shortfall rate" for nurses and midwives across England is close to 10 per cent, and in some places significantly higher. Part of this is down to the recognition, after the events at troubled health trust Mid Staffordshire, of the importance of safe staffing levels. Yet for successive years during the coalition government, the number of nurse training recruits fell.

Far from being a problem just for hospitals, there are major nursing shortages in mental health and community trusts. Between 2009 and 2016 the number of district nurses employed by the NHS in England fell by more than 40 per cent. Just as the health service tries to accelerate plans for more treatment closer to home, in key parts of the workforce the necessary resources are shrinking.

There are also worrying gaps in the supply of doctors. Even as the NHS gears up for what may prove to be its toughest winter yet, we see worrying shortfalls in A&E consultants. The health service is rightly committed to putting mental health on an equal footing with physical health. But many trusts are struggling to fill psychiatry posts. And we do not have enough GPs.

A key part of the problem is retention. Since 2010/11 there has been a worrying rise in “leaver rates” among nurses, midwives, ambulance staff and scientific technical staff. Many blame the pressures of workload, low staffing levels and disillusionment with the quality of care. Seventy per cent of NHS staff stay on for extra hours. Well over a third say they have felt unwell in the past year because of work-related stress.

Add in cuts to real basic pay, year after year, and it is hardly surprising that some are looking to other opportunities and careers outside the public sector. We need a strategy to end pay restraint in the NHS.

There is also a worrying demographic challenge. Almost one in three qualified nurses, midwives and health visitors is aged 50 or older. One in five GPs is at least 55. We have to give them reasons to stay.

NHS trusts have made important strides in engaging with their workforce. Staff ratings on being able to report concerns, feeling trusted to do their jobs, and being able to suggest improvements are encouraging. But there are still cultural problems – for example around discrimination and bullying – which must be addressed locally and nationally.

The NHS can no longer be sure that overseas recruits will step in to fill workforce gaps. In the early 2000s many trusts looked beyond Europe to meet nursing shortages. More recently, as tougher immigration and language rules took hold, a growing proportion came from the EU – though not enough to plug the gap.

Now we have all the uncertainty surrounding Brexit. We need urgent clarity on the status of current EU nationals working in the health and care systems. And we must recognise that for the foreseeable future, NHS trusts will need support to recruit and retain staff from overseas. The government says it will improve the home-grown supply, but that will clearly take time.

These problems have developed in plain sight. But leadership on this has been muddled or trumped by worries over funding. Responsibility for NHS workforce strategy is disjointed. We need a co-ordinated, realistic, long-term strategy to ensure that frontline organisations have the right number of staff with the right skills in the right place to deliver high quality care.

We must act now. This year's long-delayed workforce plan – to be published soon by Health Education England – could be a good place to start. But what we need is a more fundamental approach – with a clear vision of how the NHS must develop its workforce to meet these challenges, and a commitment to make it happen. 

Saffron Cordery is the director of policy and strategy at NHS Providers