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Economy

Earnings For Millennials Fall £8,000 During Their 20s Due To ‘Generational Pay Penalty’

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Thersa May visits Al Madina Mosque by UK Home Office via Flikr

Theresa May has highlighted the intergenerational inequality and has warned of Britain’s longstanding promise of ‘generational pay progress’ which could result in a ‘pay penalty’ for millennials, who are at risk of being the first generation to earn less than their predecessors over the course of their working lives.

This fresh evidence comes from the Resolution Foundation as today it launches its flagship Intergenerational Commission (IC).

The Commission’s launch report, which analyses the living standards of different generations, offers fresh evidence of the “growing divide between a more prosperous older generation and a struggling younger generation” that the new Prime Minister warned of in her leadership speech last week.

It shows that millennials (aged between 15 and 35) have been hit hardest by the recent pay squeeze. As a result a typical millennial has earned £8,000 less during their 20s than a typical person in the previous generation – generation X.

While much of this pay squeeze is due to some young people having the bad luck of entering the labour market in the midst of a downturn, the report shows that Britain’s ‘generational pay progress’ actually stopped before the start of the financial crisis.

Looking at the pay of a typical 25 year old the report finds that older millennials, who are now in their early-mid 30s and therefore turned 25 before the financial crisis hit, are the first workers to earn less than those born five years before them. The Foundation adds that younger millennials who entered work into the pay squeeze will have had their pay hit even harder.

The report warns that having experienced a poor start to their careers, which has the potential to permanently scar their lifetime earnings, current economic uncertainty could put further downward pressure on their future pay.

It shows that even an optimistic scenario, in which the future pay of millennials improves rapidly and follows the same path as the baby boomers, their lifetime earnings would be around £890,000. This would reduce their generational pay progress to just 7 per cent over generation X – a third of the size of the pay progress that generation X are set to enjoy over the baby boomers.

However a more pessimistic scenario, in which the future pay of millennials instead follows the path of generation X, would reduce their lifetime earnings to around £825,000. This would make the millennials the first ever generation to face a generational pay penalty by earning less than their predecessors over the course of their working lives.

The Foundation notes such a pessimistic scenario could emerge if the short-term economic outlook worsens as a result of Brexit, the weak productivity outlook forecast by the OBR earlier this year persists, and if pay growth continues to fall behind productivity gains, as it has done for much of the last two decades.

The Foundation warns that this potential generational pay penalty comes on top of a bleak outlook for home ownership among millennials. It notes that baby boomers were 50 per cent more likely to own their home by the time they were 30 compared to millennials today. This shift towards renting and higher rents has meant that millennials have spent £44,000 more on rent by the time they reach 30 compared to the baby boomers.

The Foundation today launches a flagship Intergenerational Commission to explore growing inequality between generations. It says that repairing the fraying social contract between generations should be at the heart of the new Prime Minister’s task of unifying the country in the aftermath of the referendum.

The Commission’s members are: Vidhya Alakeson (Power to Change), Dame Kate Barker (ex-Bank of England), Torsten Bell (Resolution Foundation), Carolyn Fairbairn (CBI), Lord Geoffrey Filkin (Centre for Ageing Better), Sir John Hills (LSE), Paul Johnson (IFS), Sarah O’Connor (Financial Times), Frances O’Grady (TUC), Ben Page (Ipsos MORI), David Willetts (Commission chair and Resolution Foundation) and Nigel Wilson (Legal & General).

David Willetts, Executive Chair of the Resolution Foundation and Chair of the Intergenerational Commission said:

“Fairness between the generations is something public policy has ignored for too long. But it is rising up the agenda with the Prime Minister, politicians of all parties, business leaders and others rightly identifying it as a growing challenge.”

That is why the Intergenerational Commission is being set up to provide the most comprehensive analysis of the living standards challenges faced by different generations – and recommendations for action.

“This is about taking seriously the social contract between the generations that underpins our society and state, and recognising that everyone is worried about the future of younger generations. In the real world there is no such thing as generational war – instead there are parents, grandparents, families and communities all sharing the same hopes for younger generations.”

Torsten Bell, Director of the Resolution Foundation, said:

“Generational inequality risks becoming a new inequality for our times, and nowhere is that clearer than on pay. We’ve taken it for granted that each generation will do much better than the last – earning more and enjoying a higher standard of living. But that approach risks looking complacent given the realities of recent years and prospects for the future.

“Far from earning more, millennials have earned £8,000 less during their 20s than the generation before them. The financial crisis has played a role in holding millennials back, but the problem goes deeper than that. Even on optimistic scenarios they look likely to see much lower generational pay progress than we have become used to, and there is even a risk that they earn less over their lifetimes than older generations, putting generational pay progress into reverse.”

Economy

A Good Look At How Homes Will Become More Energy Efficient Soon

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energy efficient homes

Everyone always talks about ways they can save energy at home, but the tactics are old school. They’re only tweaking the way they do things at the moment. Sealing holes in your home isn’t exactly the next scientific breakthrough we’ve been waiting for.

There is some good news because technology is progressing quickly. Some tactics might not be brand new, but they’re becoming more popular. Here are a few things you should expect to see in homes all around the country within a few years.

1. The Rise Of Smart Windows

When you look at a window right now it’s just a pane of glass. In the future they’ll be controlled by microprocessors and sensors. They’ll change depending on the specific weather conditions directly outside.

If the sun disappears the shade will automatically adjust to let in more light. The exact opposite will happen when it’s sunny. These energy efficient windows will save everyone a huge amount of money.

2. A Better Way To Cool Roofs

If you wanted to cool a roof down today you would coat it with a material full of specialized pigments. This would allow roofs to deflect the sun and they’d absorb less heat in the process too.

Soon we’ll see the same thing being done, but it will be four times more effective. Roofs will never get too hot again. Anyone with a large roof is going to see a sharp decrease in their energy bills.

3. Low-E Windows Taking Over

It’s a mystery why these aren’t already extremely popular, but things are starting to change. Read low-E window replacement reviews and you’ll see everyone loves them because they’re extremely effective.

They’ll keep heat outside in summer or inside in winter. People don’t even have to buy new windows to enjoy the technology. All they’ll need is a low-E film to place over their current ones.

4. Magnets Will Cool Fridges

Refrigerators haven’t changed much in a very long time. They’re still using a vapor compression process that wastes energy while harming the environment. It won’t be long until they’ll be cooled using magnets instead.

The magnetocaloric effect is going to revolutionize cold food storage. The fluid these fridges are going to use will be water-based, which means the environment can rest easy and energy bills will drop.

5. Improving Our Current LEDs

Everyone who spent a lot of money on energy must have been very happy when LEDs became mainstream. Incandescent light bulbs belong in museums today because the new tech cut costs by up to 85 percent.

That doesn’t mean someone isn’t always trying to improve on an already great invention. The amount of lumens LEDs produce per watt isn’t great, but we’ve already found a way to increase it by 25 percent.

Maybe Homes Will Look Different Too

Do you think we’ll come up with new styles of homes that will take off? Surely it’s not out of the question. Everything inside homes seems to be changing for the better with each passing year. It’s going to continue doing so thanks to amazing inventors.

ShutterStock – Stock photo ID: 613912244

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Economy

IEMA Urge Government’s Industrial Strategy Skills Overhaul To Adopt A “Long View Approach”

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IEMA, in response to the launch of the Government’s Industrial Strategy Green Paper, have welcomed the focus on technical skills and education to boost “competence and capability” of tomorrow’s workforce.

Policy experts at the world’s leading professional association of Environment and Sustainability professionals has today welcomed Prime Minister Teresa May’s confirmation that an overhaul of technical education and skills will form a central part of the Plan for Britain – but warns the strategy must be one for the long term.

Martin Baxter, Chief Policy Advisor at IEMA said this morning that the approach and predicted investment in building a stronger technical skills portfolio to boost the UK’s productivity and economic resilience is positive, and presents an opportunity to drive the UK’s skills profile and commitment to sustainability outside of the EU.

Commenting on the launch of the Government’s Industrial Strategy Green Paper, Baxter said today:

“Government must use the Industrial Strategy as an opportunity to accelerate the UK’s transition to a low-carbon, resource efficient economy – one that is flexible and agile and which gives a progressive outlook for the UK’s future outside the EU.

We welcome the focus on skills and education, as it is vital that tomorrow’s workforce has the competence and capability to innovate and compete globally in high-value manufacturing and leading technology.

There is a real opportunity with the Industrial Strategy, and forthcoming 25 year Environment Plan and Carbon Emissions Reduction Plan, to set long-term economic and environmental outcomes which set the conditions to unlock investment, enhance natural capital and provide employment and export opportunities for UK business.

We will ensure that the Environment and Sustainability profession makes a positive contribution in responding to the Green Paper.”

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