Older millennials were disproportionately hit by the 2008 financial crisis and many are still feeling its effects. It’s important the Government doesn’t pass over this age group when it comes to policy making, in favour of those under 30.
Analysis by the Institute for Fiscal Studies has found that millennials in their thirties have been disproportionately affected by the credit crisis. Those aged 30 to 39 – roughly speaking, older millennials – are around £2,100 worse off compared with ten years ago.
Younger millennials (those aged between 18 and 30) have also been sold short – they are on average £1,000 worse off than they might have been. But it’s the older ones who have the biggest dent in their incomes.
By comparison, the older cohorts have seen their incomes drop by just 1%.
This is yet another piece of a growing body of evidence that shows the differing fortunes of those within the so-called millennial generation. Millennials are often seen as a single group in the media, but within this segment, there are two groups who entered the workforce at very different times and have faced vastly different prospects as a result.
This highlights the need for bespoke policies not just for millennials as a whole, but also for subsets within the millennial demographic.
Let’s look at some of the issues older millennials have faced compared with their younger counterparts.
The jobs market was tougher in 2008
When older millennials were starting out, the job market was at its most insecure for a generation. Unemployment in 2008 rose sharply to reach its highest level for 14 years.
Someone graduating in 2008 could expect, on average, to have a starting salary of £24,000. Fast forward to 2016, however, and starting salaries for new graduates had improved to on average £30,000. This means someone who graduated once the crisis had ebbed away is likely to have seen a wage premium in comparison with their older counterparts.
Confidence and soft skills
Entering a job market at a time when jobs were scarce did millennials no favours at all when it came to building up confidence and other soft skills that are required to flourish in the workplace. If the message you are told when you first look for your graduate job is “you’re not really needed”, it’s hard not to take that as a personal knock-back.
Even those who did find jobs will have expended far more effort just to stand still. With so many jobs at risk, you have to work that much harder to justify your position, let alone getting yourself into a position where you can start to move forward and look for promotions.
This has also translated into the way this age group make financial decisions. They’ve engaged with products and adviser later on in life compared with other age groups, and they are more likely to see themselves as being bad with money than other age groups. That’s partly because they haven’t had the spare cash with which to take risks. The income they have had has been eaten up by basic living costs.
This is a clear separator for the two age groups as the higher tuition rate was introduced from 2012. Clearly those graduating after these were introduced face more direct student debt. But actually, the reforms to the tuition rate fee have had some unexpected benefits.
It’s made getting into university is now less competitive – unconditional offers from universities have risen from 2,985 in 2013 to 67, 915 today and it’s clearly a student’s market. Additionally, universities have been forced to evolve and improve, particularly for those doing prestigious but oversubscribed arts courses like English and History. Gone are the days of universities demanding the highest grades from students for entry and then offering them poor value for money for the duration of these courses in terms of teaching.
Moreover, even those in their early 30s will have experience of paying higher costs towards university than older groups. Tuition fees of up to £3,000 per year were introduced from 2005, so this age group still faces high levels of student debt.
No stake in the system
Given the young age of older millennials during the 2008 crisis, their struggles were largely ignored in favour of those with more of a financial stake in the system. While the Government propped up homeowners, by keeping interest rates low, those just starting out faced increasingly high rents and difficulty making ends meet.
The government did very little to help those struggling during the crisis. It has now, belatedly, admitted that the younger age group did struggle and put some policies in place to ease the burden for today’s young people. This can be seen with the “millennial railcard” that was brought in to help those under 30 as well as moves by both the main UK political parties to address concerns raised by those aged 18-25.
But while the younger age groups undoubtedly need support, the original “class of 2008” still faces some of the effects of the crisis. It’s therefore important that some of these policies are targeted specifically at them or they are at least widened to take into account this unlucky cohort. Otherwise, they are in danger of becoming a lost generation.