Millennials are earning £8,000 less in their 20s than the generation before


Millennials could become the first generation to earn less than their predecessors, analysis by a think-tank has found.

The Research Foundation found that under-35s have been hit hardest by the recent pay squeeze and earned £8,000 less during their 20s than a typical person in the previous generation - known as generation X.

The finding comes just days after new Prime Minister Theresa May warned of a "growing divide between a more prosperous older generation and a struggling younger generation".

A Job Centre Plus branch
(Gareth Fuller/PA)

The report, which comes as the thank-tank launches its Intergenerational Commission, warns that a post-Brexit downturn could depress millennials' wages further.

The Intergenerational Commission report states that while some of the pay squeeze is down to millennials entering the job market as the recession hit, it also found generational pay progress had actually stopped before the 2007/08 financial crash.

If the future pay of millennials follows the path of generation X, it would reduce their lifetime earnings to around £825,000 - making them the first ever generation to earn less than their predecessors over the course of their working lives.

Even if their wages followed a more optimistic path and improved rapidly like their baby boomer parents, their lifetime earnings would be around £890,000.

Notes and coins on a payslip
(Nick Ansell/PA)

This would be just 7% more than generation X and a third of the size of the pay progress that generation X are set to enjoy over the baby boomers.

The Foundation is launching its Commission to explore growing inequality between generations.

It argues the repairing of 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.

David Willetts, executive chairman of the Resolution Foundation, said: "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."