Another recession could push Millennial resentment to tipping point
Any goodwill left in avocado-munching Millennials towards their far wealthier elders will likely be gone with another recession, writes John Oxley
For those of us who came of age in the late 2000s, the sight of despairing traders and stock tickers flashing red is a familiar scene. The sort of stock turmoil of the last week has marked our adult life, with first the Great Financial Crisis, then Covid and now the cataclysm of Trump’s tariffs.
The dramatics of a big stock tumble may now fill us with nostalgia rather than fear – but for Millennials and those younger, the impact of these successive crises is very real, and another recession threatens to worsen intergenerational unfairness.
The Millennial malaise
Studies have shown that people who entered the workforce around 2008 are still bearing the scars of that crisis. In the UK, in particular, real terms wage growth has been largely stagnant since then. Millennials have now had a decade and a half, perhaps a third of their working life, with wages struggling to outpace inflation.
Of course, this has been exacerbated by the housing crisis. The cost of purchasing or even renting property has surged well above normal rates of inflation. Even the highest earners in their 30s and 40s are now left paying far more for far less than generations before, while those on lower incomes find it hard even to find adequate housing to rent.
Further levies on the young to fund largesse for the old could really rankle
Stagnant incomes and surging prices have made it harder for younger generations to build wealth. Another recession will make this even more difficult. They face further wage stagnation and a scary job market in their prime earning years. Those who have bought houses will see the values hold or even drop while they continue to service big mortgages. Those without will still find it hard to buy, with credit and pay rises hard to come by. Those younger will feel the squeeze, too.
Generational warfare is playing out in politics
Intergenerational unfairness is a rising issue in our politics. Younger people find themselves with sunk wages, paying higher taxes (including the de facto tax of student finance). While not universally wealthy, many older people have benefitted from rising house prices and more generous private and state pension provisions. Now, the average retiree has more disposable income than the average worker. As Millennials become a more important voting bloc, this could cause real pressure.
Already, this is starting to show. The success of the YIMBY movement, which has pushed the government towards planning reform in the hope of controlling house prices, has been an early indicator of this shift. So, too, perhaps, was the government’s decision to cut the Winter Fuel Allowance for most older people, a rare cut that hit retired people more than those working.
The next target may be the triple lock, which ensures state pensions have real-term rises each year. This week, amid stocks falling, the government confirmed a 4.1 per cent rise is coming. With a recession on the horizon, few people in work are likely to see such generosity but are instead going to be paying for it. With the government already struggling to meet its own fiscal rules and obligations to public services, there are likely to be tax rises at some point. But further levies on the young to fund largesse for the old could really rankle.
For those who have already seen their careers blighted by successive crises, another recession might feel familiar. That won’t, however, stop it being painful. Compounding the pain the young have already felt could change the political landscape, too. Millennials and younger voters are becoming both increasingly powerful as voters and more aware of the successive bad hands they have been dealt. Being squeezed again as they enter middle age could reignite the generational self-interest of Millennial voters and provide another kick to our political order.
John Oxley is a political commentator and associate fellow at Bright Blue