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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

Will Self-Driving Cars Be Better for the Environment?

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self-driving cars for green environment
Shutterstock Licensed Photo - By Zapp2Photo | https://www.shutterstock.com/g/zapp2photo

Technologists, engineers, lawmakers, and the general public have been excitedly debating about the merits of self-driving cars for the past several years, as companies like Waymo and Uber race to get the first fully autonomous vehicles on the market. Largely, the concerns have been about safety and ethics; is a self-driving car really capable of eliminating the human errors responsible for the majority of vehicular accidents? And if so, who’s responsible for programming life-or-death decisions, and who’s held liable in the event of an accident?

But while these questions continue being debated, protecting people on an individual level, it’s worth posing a different question: how will self-driving cars impact the environment?

The Big Picture

The Department of Energy attempted to answer this question in clear terms, using scientific research and existing data sets to project the short-term and long-term environmental impact that self-driving vehicles could have. Its findings? The emergence of self-driving vehicles could essentially go either way; it could reduce energy consumption in transportation by as much as 90 percent, or increase it by more than 200 percent.

That’s a margin of error so wide it might as well be a total guess, but there are too many unknown variables to form a solid conclusion. There are many ways autonomous vehicles could influence our energy consumption and environmental impact, and they could go well or poorly, depending on how they’re adopted.

Driver Reduction?

One of the big selling points of autonomous vehicles is their capacity to reduce the total number of vehicles—and human drivers—on the road. If you’re able to carpool to work in a self-driving vehicle, or rely on autonomous public transportation, you’ll spend far less time, money, and energy on your own car. The convenience and efficiency of autonomous vehicles would therefore reduce the total miles driven, and significantly reduce carbon emissions.

There’s a flip side to this argument, however. If autonomous vehicles are far more convenient and less expensive than previous means of travel, it could be an incentive for people to travel more frequently, or drive to more destinations they’d otherwise avoid. In this case, the total miles driven could actually increase with the rise of self-driving cars.

As an added consideration, the increase or decrease in drivers on the road could result in more or fewer vehicle collisions, respectively—especially in the early days of autonomous vehicle adoption, when so many human drivers are still on the road. Car accident injury cases, therefore, would become far more complicated, and the roads could be temporarily less safe.

Deadheading

Deadheading is a term used in trucking and ridesharing to refer to miles driven with an empty load. Assume for a moment that there’s a fleet of self-driving vehicles available to pick people up and carry them to their destinations. It’s a convenient service, but by necessity, these vehicles will spend at least some of their time driving without passengers, whether it’s spent waiting to pick someone up or en route to their location. The increase in miles from deadheading could nullify the potential benefits of people driving fewer total miles, or add to the damage done by their increased mileage.

Make and Model of Car

Much will also depend on the types of cars equipped to be self-driving. For example, Waymo recently launched a wave of self-driving hybrid minivans, capable of getting far better mileage than a gas-only vehicle. If the majority of self-driving cars are electric or hybrids, the environmental impact will be much lower than if they’re converted from existing vehicles. Good emissions ratings are also important here.

On the other hand, the increased demand for autonomous vehicles could put more pressure on factory production, and make older cars obsolete. In that case, the gas mileage savings could be counteracted by the increased environmental impact of factory production.

The Bottom Line

Right now, there are too many unanswered questions to make a confident determination whether self-driving vehicles will help or harm the environment. Will we start driving more, or less? How will they handle dead time? What kind of models are going to be on the road?

Engineers and the general public are in complete control of how this develops in the near future. Hopefully, we’ll be able to see all the safety benefits of having autonomous vehicles on the road, but without any of the extra environmental impact to deal with.

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Economy

New Zealand to Switch to Fully Renewable Energy by 2035

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renewable energy policy
Shutterstock Licensed Photo - By Eviart / https://www.shutterstock.com/g/adrian825

New Zealand’s prime minister-elect Jacinda Ardern is already taking steps towards reducing the country’s carbon footprint. She signed a coalition deal with NZ First in October, aiming to generate 100% of the country’s energy from renewable sources by 2035.

New Zealand is already one of the greenest countries in the world, sourcing over 80% of its energy for its 4.7 million people from renewable resources like hydroelectric, geothermal and wind. The majority of its electricity comes from hydro-power, which generated 60% of the country’s energy in 2016. Last winter, renewable generation peaked at 93%.

Now, Ardern is taking on the challenge of eliminating New Zealand’s remaining use of fossil fuels. One of the biggest obstacles will be filling in the gap left by hydropower sources during dry conditions. When lake levels drop, the country relies on gas and coal to provide energy. Eliminating fossil fuels will require finding an alternative source to avoid spikes in energy costs during droughts.

Business NZ’s executive director John Carnegie told Bloomberg he believes Ardern needs to balance her goals with affordability, stating, “It’s completely appropriate to have a focus on reducing carbon emissions, but there needs to be an open and transparent public conversation about the policies and how they are delivered.”

The coalition deal outlined a few steps towards achieving this, including investing more in solar, which currently only provides 0.1% of the country’s energy. Ardern’s plans also include switching the electricity grid to renewable energy, investing more funds into rail transport, and switching all government vehicles to green fuel within a decade.

Zero net emissions by 2050

Beyond powering the country’s electricity grid with 100% green energy, Ardern also wants to reach zero net emissions by 2050. This ambitious goal is very much in line with her focus on climate change throughout the course of her campaign. Environmental issues were one of her top priorities from the start, which increased her appeal with young voters and helped her become one of the youngest world leaders at only 37.

Reaching zero net emissions would require overcoming challenging issues like eliminating fossil fuels in vehicles. Ardern hasn’t outlined a plan for reaching this goal, but has suggested creating an independent commission to aid in the transition to a lower carbon economy.

She also set a goal of doubling the number of trees the country plants per year to 100 million, a goal she says is “absolutely achievable” using land that is marginal for farming animals.

Greenpeace New Zealand climate and energy campaigner Amanda Larsson believes that phasing out fossil fuels should be a priority for the new prime minister. She says that in order to reach zero net emissions, Ardern “must prioritize closing down coal, putting a moratorium on new fossil fuel plants, building more wind infrastructure, and opening the playing field for household and community solar.”

A worldwide shift to renewable energy

Addressing climate change is becoming more of a priority around the world and many governments are assessing how they can reduce their reliance on fossil fuels and switch to environmentally-friendly energy sources. Sustainable energy is becoming an increasingly profitable industry, giving companies more of an incentive to invest.

Ardern isn’t alone in her climate concerns, as other prominent world leaders like Justin Trudeau and Emmanuel Macron have made renewable energy a focus of their campaigns. She isn’t the first to set ambitious goals, either. Sweden and Norway share New Zealand’s goal of net zero emissions by 2045 and 2030, respectively.

Scotland already sources more than half of its electricity from renewable sources and aims to fully transition by 2020, while France announced plans in September to stop fossil fuel production by 2040. This would make it the first country to do so, and the first to end the sale of gasoline and diesel vehicles.

Many parts of the world still rely heavily on coal, but if these countries are successful in phasing out fossil fuels and transitioning to renewable resources, it could serve as a turning point. As other world leaders see that switching to sustainable energy is possible – and profitable – it could be the start of a worldwide shift towards environmentally-friendly energy.

Sources: https://www.bloomberg.com/news/articles/2017-11-06/green-dream-risks-energy-security-as-kiwis-aim-for-zero-carbon

https://www.reuters.com/article/us-france-hydrocarbons/france-plans-to-end-oil-and-gas-production-by-2040-idUSKCN1BH1AQ

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