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Are UK younger generations poorer than their parents? Introduction It is expected that newer generations have better and more opportunities than their preceding generations, but is this always the case, and especially in the United Kingdom? According to Howker and Malik1 (2010), younger generations are more likely to suffer from economic hiccups than their parents. For instance, more adult youth in the UK are finding themselves stuck in their parents’ homes, years after they are past the age of living with their parents. Even those who are married are finding themselves having to depend on their parents for material support such as school fees for their children, rent, etc. This has placed a burden on the older generation, who in their old age only depend on their savings rather than active income. This trend is definitely a worrying one and it is absolutely important for this problem to be looked at in a deeper person. Evidence According to the telegraph, it has been indicated that more young adults are finding themselves in the trap of having to be financially inadequate especially in their model age. This new wave of financial insecurity for people in their prime age has been identified through the socioeconomic classes, whether it is the highly educated or the lowly educated. This continues to be son despite the fact that the economy has improved in the last few decades. Salaries and wages have increased the education levels have increased especially where age is concerned. For instance, a twenty five year old person is more likely to be more educated today than a twenty five year old person in the 1960s. They also have a higher chance to be earning more and haven a more formal white collar job. Despite these exiting facts, the same person is more likely to be more financially insecure than his counterpart in the 1960s and 70s. In this regard, one can ask; why is this phenomenon happening. Why is today’s generation more financially insecure and inadequate than the earlier generations despite them living in a world where they have more opportunities, more technology and more education? Why are they financially insecure in a country that that has a much better economy than it did during their parent’s time? This younger generation, despite having more economic opportunities has more economic challenges that would need to be addressed. Despite the economy being better, they live in a time where living standards are higher, job opportunities have been diluted and government support is dwindling. As a result, for the younger person, he faces more challenges economically and thus this cancels out any economic opportunity that may be there for them. This can be said to be caused by a number of factors which together act to make life for the younger people harder every day despite what they try. While these factors may not be the same for every younger person, together, they are the aggregate reason as to why the younger people are always poorer than their young parents. These reasons range from broader socioeconomic issues such as higher unemployment rates to the more individual reasons such as personal aggressiveness on the part of the younger people. Government support Sources indicate that over the years, the government has reduced its support for the public. Unlike in earlier times in UK where people would get a lot of support from the government, the younger generation may not be able to get this support and even in cases where it is available, it is hardly effective or enough to help them lead a better life. UK government in the earlier days was more social than it is today. As time has moved, the privatization of many government departments in the name of making them more efficient and profitable has in effect led to many people being insecure in terms of their careers. For instance, a younger person with a secondary education three or four decades ago would have had a better chance of getting a stable, pensionable secure job than a person with a university education in today’s economy. The government has been blamed for its neglect of its role of guaranteeing a stable and reliable income for the citizens. Fig 1.0 UK government welfare spending as since 2001 source: http://www.economicshelp.org/blog/6810/economics/the-growth-of-welfare-spending-in-the-uk/ Fig 1.1 UK welfare spending as percentage of GDP: source http://www.economicshelp.org/blog/6810/economics/the-growth-of-welfare-spending-in-the-uk/ Modern generations are shying away from more technical education courses There has been an issue that younger generations in the UK are less aggressive compared to their parents. The young adults are the sons and daughters of the baby boomer generation. The baby boomer generation was made of hardworking people who were determined to make life work for them. They were brought up in a time when hard work was commended and rewarded (Brooke, 2006)2. Their offspring, however, due to the fact they grew up in comfort afforded to them by their hardworking parents and knew nothing of the hard times their parents may have had to go through, they are more relaxed. This has been reflected in the kinds of courses that they are taking in school especially at college and university level. Unlike the university students of a few decades ago, the youth of today shy away from the more technical courses and choose the easier less technical courses. The earlier generations would in many cases be determined to take up more technical courses not only because they were prestigious but also because they were more promising in terms of employment. However, the younger generations are not like that. They are more likely to take the easier course so that they will have an easier sail through college. Although this shift can also be attributed to other factors such as the fact that even non-technical careers have been socialized and made to look like they are also feasible careers, data shows evidence of the fact that today’s generation is not too determined to take harder courses so that they can be guaranteed of jobs. This has led to the reduction of engineers, architects and such related technical professions and the brain drain that follows is an indication of this new trend. For instance, the royal academy of engineering has recorded that the ration of students taking up engineering courses has reduced in the last few decades. As a result, employers may need to export their jobs to other countries, especially poor countries here there are more engineers and who are willing to take lower salaries to do the same job. Insert graph indicating the level of students taking engineering courses over the years Fig 1.3 showing he level of UK students who enroll for engineering courses, as compared to other nationalities From: http://www.international.gc.ca/education/report-rapport/strategy-strategie/ch_3.aspx This laxity and lack of aggressiveness among UK youth can be seen as a reason for them being on poorer economic conditions than their parents did. The lack of aggression may be replicated across the social stratum, and not just in education. As a result, due to lack of aggressiveness and determination, they are less likely to unlock economic opportunities in their lives. This becomes a very important factor that may lead to the explanation of why today’s young adults are more financially insecure compared to their parents. This, combined with other factors may determine why this has been happening and thus explain why the UK newer generations are having harder economic times at an era where the economy is doing much better. Is the economy doing much better? As has already been identified, the irony of the fact that the younger generations are having much more economic problems than their parents is the fact that they live in a time when there are more opportunities, more technology and a better and bigger economy. However, to really understand this and dissolve the irony behind it, it is necessary to ask a number of questions. The very first issue to query is if the modern economy is doing any better than the it faired years ago. To determine how the economy of today compared to the economy of a few decades a ago, it is necessary to not only look at the most obvious issues but to look at other indicators that may help to understand the underlying issues. For instance, although it is easy to conclude that the modern UK economy is better than that of two or three decades ago, it is also necessary to note that newer economic challenges have also erupted over the years. Other factors such as inflation have to be looked at. The statement that the modern UK economy has improved over the last few years can be misleading and dubious because of the fact that the UK economy went through a recession in the past few years. This recession which had worsened in the year 2008 brought new challenges for people in the United Kingdom as unemployment rates went up. Fig 1.4 graph for UK unemployment rates since 1971 Source: http://britishartist.tumblr.com/ Despite this, this does not wholly explain the fact that young adults in the current generation are going through the hard times that are worse than their parents. Despite the economic recession in the past few years, the economy is much better today than it was in the past few decades. The new technology, better health services, more global opportunities, more educating etc should all trump the economic problems of today and thus make the young generation to be better than their older generations. However, this has not been the case. In fact, based on the economic development of the past, the younger generations should be at a better situation than their parents. But this has not been the case. Living standards have increased It is Maslow3 (1987) who first came up with the theory of human motivation that suggests that people’s needs graduate from one level to another as the person achieves lower needs. When an individual achieves lower needs, the next level of needs become the most important in their lives. This theory works at both the micro and the macro level. At the macro level as the society achieves its most urgent needs, the higher needs become even more important. This can explain why the new generations are poorer than the older generations. While the economy has improved over the years, younger generations must have to deal with more economic obligations which their parents did not have to deal with in their time. Due to this, it is extremely cumbersome for them, even among those who earn more, to meet these basic wants. Younger people may earn more than their counterparts a generation ago, but they have to deal with higher cost of living, more economic obligations and more technology have brought up more costs and more needs. For instance, a young parent today will have to need to buy a computer for their children, yet their parents did not have this financial need because there were no personal computers. This has been a major factor to consider and there is a necessity to ensure that there are ways to deal with this. College loans burden According to Machin & Vignoles4 (2005), college loans have become a big burden for most young people who are graduating from college in the present days. Unlike their parents who would have completely subsidized school fees, the modern young person has to pay up for the college loans that he is offered by the government. This has meant that they start off life with a big loan which they have to deal with. This, and the fact that they are likely to be guaranteed of employment after completing college means that they are more likely to have m many financial issues. Fig 1.6 graph indicating growth of loan burden per student since 1999 (510% growth since 1999) Source: http://www.theatlantic.com/business/archive/2011/08/chart-of-the-day-student-loans-have-grown-511-since-1999/243821/ Fig 1.7 showing the faster growth of college tuition and which outpaces salary growth http://www.zerohedge.com/news/2012-10-01/chart-day-college-tuition-vs-real-disposable-income The problems of college loans may seem on the surface like it is not a big issue. However, with the trend that is being detected, this may end up turning into a menace in the future. The issue of college loans, combined with the issue of unemployment poses a huge threat to many young people who by the time they graduate find themselves having accumulated huge debts and cannot find a good stable employment right away to help in settling off this loan. Lack of good employment may lead to the individual taking up credit card loans and this pushes them further down the drain with regard to their financial and economic success. The domino effect As today’s young adults are less economically well off, they are going to transfer this misfortune to their offspring. A study by the UK government and headed by David Cameron indicated that the children of future will be the first in nearly a century of UK’s recent history to be the most disadvantaged generation in the UK (Boffey, 2013)5. These children, unless an intervention is launched, will be worse off than the older generations and their grandparents. This study has showed a worrying trend that will mean that these young people, by the time they are reaching adulthood will have big economic and financial issues. This will also be coupled with the fact that this new generation will have to deal with other factors such as social restructuring which will be necessary as the technological singularity is achieved. Technological singularity has been predicated by many scientists such as Stephen Hawkins and technologists to occur by the year 2035 and this will concur with the time these children of today will be reaching adulthood and start taking up socioeconomic and financial responsibilities. Changing social structures There have been a number of social issues that can also be attributed to these changes and the financially oppressed younger generations. These factors range from economic to social, and even in some cases political issues. What is clear that they are economically disadvantaged than their parents were and that this is regardless of the better economic set up of their times. Some of these social economic issues include the death of the middle class, the rebirth of capitalism and many others. The disappearing middle class This problem is not just a UK issue but is being experienced in most developed nations such as the US and other west European nations such as France, Italy etc. An economy with a big middle class has a better chance of providing people with opportunities to be financially secure. However, as the middle class disappears, the society is made of only a few wealthy people and more highly economically disadvantaged people. Needless to say, the UK middle class of today is much thinner than it was a few decades ago. The young adults of today live in a society where the middle class is no longer part of the society. In such a society where the middle class is disappearing, having young adults who are economically disadvantaged is not a strange thing at all. In earlier generations such as the baby boomer generation, the fact that the middle class was big and a major contributor to the economy was a good thing not only for the economy but for the average person at the micro level. This has however changed over time and it is absolutely necessary to identify how this issue can be solved. The gradual disappearance of the middle class remains to be an problem that must be solved. More needs to be investigated in order to determine if this will solve the issue of newer generations being poorer than the older generations. The birth of new capitalism New ways of managing the economy have also factored in with regard to how the newer generations are able to deal with their socioeconomic problems. Capitalism has been more pronounced than at any other time in United Kingdom. With most private employers becoming more capitalistic and trying to minimize their wage bills as much as possible, this has not only led to unemployment but also led to lower wages and salaries. This is unlike in the earlier days where the employers were more interested in making sure that their employees had a safe and reliable income. The private sector offers a very big percentage of the employment available in the economy today. This makes the private sector the main employer in the UK economy. With the employment being offered being less of an opportunity to have a good life due to the fact that those salaries are not enough to meet the many needs the new generations have, it has meant that they have to face harder times than their parents. This has especially been caused by the fact that the inflation is higher than the rates at which salaries have grown in the past two decades. Employers, especially the private sector employers have not kept the salaries and wages to par with the inflation rates. This remains to be the reality even with the fact that the same employers have increased the prices of the products to reflect new inflation rates. This leaves the common person at a very hard position because they gave to survive with much lower incomes and higher expenditure. Although they seem to earn relatively higher than their parents did a few decades ago, when their salary figures are adjusted for the inflation rates of the last few decades, they seem to earn much less. Commodities of today are also much higher in cost. Renting a home for instance in the 1960s and 1970s would have cost a person a very small percentage of their income. Today, younger generations of today have to part with ever increasing and bigger chunks of their income to rent a home. The same applies to other recurrent expenditures such as food, clothing etc. This has left the younger generations at a situation where they have to suffer more economic hardship as compared to their parents, even though the modern economies in which they work seem to offer more opportunities. It is therefore a matter of the fact that the opportunities have not grown at the same rate as the challenges. Most of these young people take home big incomes where the income is being waited by bigger bills. The bills are bigger than their parents ever paid and as a result they drown the income. Fig 1.8 graph showing UK inflation Source: http://www.economicshelp.org/wp-content/uploads/blog-uploads/2011/02/inflation-1800-2011.png This trend of the newer generations getting more opportunities but which are over-numbered by the new challenges they get seems to be a continuing trend and may be inherited by the future generations. As a result, while the modern young adult has more problems, their children are likely to have even more problems than them. For instance, although the current young adults may have parents who have savings in forms of retirement pensions, their children are more likely to have parents who don’t have retirement saving which will mean that these parents may be financially dependent on them. With more of these younger people having parents who are economically dependent on them, they will have even more economic challenges and this will be a big challenge to their children. The trend is a worrying trend and which the government has realized can have a devastating impact in the future. Going to war The most economically successful generation in the history of UK is the baby boomer generation (Ball, Maguire & Macrae, 2000)6. This were people who were born and grew up in the years surrounds the World War II era grew up in a time when war, and the aftermath of war, created a lot of employment for young people, even the uneducated. It is even estimated that the many deaths of soldiers was itself a creation of employment since these people left their employment positions. This created employment since the manufacturing of war equipment became a lucrative business for many firms. Some of these firms were firms for manufacturing other types of equipment such as motor cars. With the manufacturing of fighting equipment becoming a lucrative business, they turned into this new profit-making business. The result was that there was massive employment for people and this made it easier for them to success economically. In other words, although war had negative impacts, it also helped in creating employment, something that is always hard for the government to do. These people were basically being paid to kill people in foreign countries. While countries like Japan and Germany were going down in flames, the many Britons who were employed by the “war industry” were benefitting. These side benefits of war to the economy did not end when the war ended. After the war, the war, veterans were also given compensations and they used this to invest and again this created even more employment. The government also invested heavily after the war in order to rebuild the infrastructure and restore the economy and this created a lot of employments opportunities. These conditions made the generation of that time to have ever better time. With the newer generation, it is proving to be much harder to have these conditions which are favorable to the economy. They fail to gain from the same opportunities which seemed to flow few decades ago. The opportunities that made the earlier generations to be more successful are hard to replicate today because the government cannot go to war just to recreate the conditions that made baby boomer generation to be economically successful. Conclusion It is very evident that the younger generations have much more economic problems than their parents ever had. This has happened even though there is some advancement that has been achieved in the economic systems of the modern economy. Ironically, more technology, bigger economy, globalization and other factors have not made things easier for the younger people. In fact, the very same factors that may be expected to help the young people to be better economically than their parents are the same factors that have made them to be worse off. For instance, globalization is expected to bring min more opportunities for the younger people, opportunities that their parents did not have. Yet, instead of the younger people benefitting from this, they have found the same globalization being a b rather than a stepping stone to more opportunities. What is startling is that this culture is feared to continue with the future generation, with each being worse off than the previous one. If this trend continues the UK economy will be at a much bigger problem in the future and the future generations must be protected from this menace that is lurking in the near distance. Bibliography BALL, S.J., MAGUIRE, M. & MACRAE, S., Choice, Pathways, and Transitions Post-16: New Youth, New Economies in the Global City. (New York, NY: Psychology Press, 2000). BOFFEY, D. , Middle-class young will fare worse than their parents. Retrieved July 26, 2014, from The Guardian : http://www.theguardian.com/society/2013/oct/12/middle-class-young-people-future-worse-parents (2013, December 23) BROOKE, C., Wealth Shift: Profit Strategies for Investors as the Baby Boomers Approach Retirement. (New York, NY: Penguin, 2006). HOWKER, ED.. & MALIK,S.. Jilted Generation: How Britain has Bankrupted its Youth. (New York, NY: Icon Books, 2010). MACHIN, S. & VIGNOLES, A. Whats the Good of Education?: The Economics of Education in the UK. (Boston, MA: Princeton University Press, 2005. MASLOW, A. Motivation and Personality. (New York, NY: Harper and Row, 1987). Read More