The amount of workers between the ages of 21 and 30 in “low paying jobs” has tripled in the last 40 years. This is according to new research which is also helping to explain why young people are locked out of the housing market.
The independent “thinktank”, the Resolution Foundation, will release its findings later this month that almost 3 in 10, 29%, will now be considered in low paying work. When that is transferred to human terms, will equate to roughly one and a half million young workers in the market. The figure in 1975 was as low as 8% and yet now there has been a dramatic shift in the way young workers are financially reimbursed for the job they do.
Over this same period however older workers, those between ages 51 and 60, have had a dramatic decrease in the ratio of lower paying work. Amongst this older age group there has been a steady decline in low paying work since the 1990s, the figure for old workers in low paying positions is now down to 16% the lowest it has been since the 50s. This again, when considering these figures as humans instead of numbers on a page, indicate that this will be roughly seven hundred and fifty thousand members of this bracket in low paying work.
This report is set to reinforce the generally held belief that although the economy is recovering well, the benefit is not being transferred on to every day workers. The wage increase that was expected to come with the restoration of our economy has not materialised; leaving a rising cost of living without a rise in wages to combat that rise. Wages amongst workers in their 20s has tumbled since the start of the recession. The median hourly pay now sits at £9.83, compared with £12.56 in 2009. Low pay is defined as “less than two thirds of the hourly median wage” that figure currently stands at £11.56 an hour. A low paid therefore is someone who makes less than £7.71 an hour. The figures are made more shocking by the fact that for elderly and young workers the ration was equal and has diverged sharply since 2002 when both groups were at 22% in low paying work.
The chief economist for Resolution Foundation, Matthew Whittaker, has argued that an economy with young low paid worker would throw up massive policy challenges in the future. Whittaker, within the report, stated “While this long-term trend suggests a structural shift in our labour market, the reasons for it are not clear. It’s likely that the increasing share of young people entering higher education has had some effect because it delays the age at which they start to move up the earnings ladder, but even if that was true, it could only account for part of this deep and long-term trend. What’s beyond dispute is that many young workers are finding the labour market tougher than they’ve ever done and this poses a challenge for all political parties. We know that younger workers have been hit hardest in recent years – this shows that it’s part of an even longer-term trend.”
This leads to the second issue. The property market is almost entirely devoid of young buyers. This is due to the high cost of housing by comparison with the wages which are being paid to these younger people. Only 3% of buyers in June 2014 were aged between 18 and 30. This is contrast to 48% who were aged between 31 and 40, according to a report by the National Association of Estate Agents.
This has meant that one of several things occurs. Firstly, that young people are forced to return to living with their parents following university, or they move into rented accommodation to save on the deposit. Whilst in some cases the first is a viable option, I feel that renting rather than being able to buy is a tremendous waste of money for a long term future. The money the young renter puts in will not be able to be recovered and will delay their start on the property ladder whilst spending money in accommodation which they are unlikely ever to own. There has been suggestion that if we move towards a system of rental which is available in Germany or Sweden we would be more able to afford to live comfortably. This is true, but it also would only become available if there were sweeping changes to our housing market which remains low on this governments list of priorities. The Organisation for Economic Co-operation has warned that should this trend of not increasing wages for young workers the housing market will stagnate due to the complete dearth of first time buyers getting onto the property ladder.
If the pay for young workers does not improve soon there will be an increasingly large gap between what is required to live in this country, which we as the youth will be unable to reach. This fact has been exposed but there has not yet been anything done. Let us hope with an election around the corner that at least one of the major parties will attempt to rectify this issue. If there is a legitimate option in regards to this they will control a massive swing group of voters who could turn an election.
The party that starts paying us better may well be the party that wins the next election.