Here’s Further Evidence That Young Australians Are Doing It Tougher Than Their Parents
This graph says it all.
A new report has found that young Australians are at risk of becoming the first generation in living memory to do it tougher than their parents, and no, it’s not because of the avocados.
If you’re a young Australian under the age of 35 today, that might sound like an obvious fact, but The Grattan Institute’s new report Generation gap: ensuring a fair go for younger Australians features some pretty sobering stats that should be a wake-up call to us all.
The report found that living standards for older Australians have been rising over time, but living standards for younger Australians have barely budged. The result is a pretty stunning generation gap, with most of the growth in wealth created by the housing boom over the last two decades going to households headed by older Australians. This graph says it all, really:
Look at that wealth gap growing. (Source: Generation gap: ensuring a fair go for younger Australians, The Grattan Institute)
To make matters worse, the report authors note that the kind of conditions that led to that massive growth in wealth — the housing boom, growth in superannuation assets — are unlikely to be repeated, making it difficult to close that gap going forward.
In short, poorer young Australians today are less likely to own a home than the generations that came before them. Young Australians are copping the impacts of wage stagnation and rising unemployment, whereas older generations already have other sources of income to cushion the blow. And as baby boomers get older, young Australians are underwriting increasing government spending on aged care, pensions and healthcare.
As the report’s lead author Danielle Wood puts it, “this is not a problem caused by avocado brunches or too many lattes.” Actually, the data shows that young people are spending less money on non-essential items than three decades ago — their money is increasingly going towards necessities like housing instead.
“If low wage growth and fewer working hours is the new normal in Australia, then we could have a generation emerge from young adulthood with lower incomes than the one before it at the same age,” Wood says. “This has already happened in the US and the UK.”
“The time for action is now: none of us wants the legacy of a generation left behind.”
The Grattan Institute recommends that governments take a range of actions to help out young people — things like tax reform, infrastructure spending and better planning rules for affordable housing would all help. You can check out the full report here.