Millennial workers' pay still feeling the pinch 10 years after the financial crisis

4 February 2019
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Pay for the typical 30-something remains 7% lower than its pre-crisis peak, according to a new study from the Resolution Foundation.

The think tank that analyses living standards for those on low-to-middle incomes found that during the financial crisis, those workers in their 20s were the worst affected.

Workers in this demographic saw their pay fall by 11% from its height. This drop has had a long term ‘scarring’ effect on their ongoing earnings.

Other age groups have not suffered to such a large degree. The pay of workers aged over 50, for example, is now over pre-crisis levels, while the average pay of all workers is only down by 3%.

For those workers looking to give their earnings a boost, whatever their age, the think tank had unequivocal advice: get a new job.

It said that while pay growth for workers who remained with their same employer was 0.5%, the average uplift for those that switched jobs was 4.5%.

Even for those that don’t change jobs, there is good pay news on the horizon. Following a pay squeeze in 2017, earnings growth recovered in 2018 and is forecast to strengthen in 2019 to 1.5%.

Although this would mean pay growth would still remain below a pre-crisis level of 2.1%, it would be the strongest rate of growth since the EU referendum in 2016.

Commenting on the research, Nye Cominetti, economic analyst for the Resolution Foundation says: “Britain has experienced a truly horrendous decade for pay, but an increasingly tight labour market is finally starting to deliver a pay recovery.

"Whether this recovery continues to build momentum in 2019 will depend in large part on what happens with Brexit.

“But there remains a lot of ground to make up before we return to pre-crisis pay levels – especially for those workers unlucky enough to enter the labour market during the financial crisis. Workers in their 30s today are still earning 7 per cent less than thirtysomethings did on the eve of the crisis.

“This scarring effect on the wages of today’s thirtysomethings is particularly concerning at a time when many are facing the increased income pressures of bringing up children or aspiring to own their own home.”

Comments

In reply to by anonymous_stub (not verified)

I know the feeling! But it is not just the millenials who sugger like this. I am retired now but I was in a job that was reclassified as one paying less so got stuck on a 'protected' rate which made my pay shink in real terms by 8%. I never got it back and never will.

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