The government is being pretty triumphant about the state of the economy recently, with George Osborne strutting around Westminster looking even smugger than he usually does. This is because, as was announced last week, the economy grew 0.8 percent in the last quarter – meaning it's finally as big as it was before the recession started in 2008.
David Cameron was of course keen to hype the economic success and stick the boot into Labour for good measure. Which is fine as far as it goes, but since so many people I know can barely afford to pay rent, I can't help but think that this crowing jars with people's lives.
And that's because for young people, it does. The way the economy has been "fixed" is based on inequality, personal debt, badly paid jobs and soaring house prices. An annual report on living standards from the Institute of Fiscal Studies shows that young people in particular are not seeing the benefit of economic recovery – in fact, as the Financial Times noted, compared to the last group to grow up in a recession, "today’s 20-somethings are in many ways doing worse than the generation before them." The fastest growth in inequality isn’t between London and the rest of the UK, or the rich and poor, but the young and old. The economy is currently conspiring to make the lives of young people pretty bleak.
Take, for instance, the above graph. As it shows, more people are in work, which is good. However, let’s ignore the fact that a missing Y axis means that they can make a six percent rise look more like a whopping 50 percent increase and look at some vital statistics have been left out.
First of all, for those in their 20s, employment has if fact fallen four percent. And young people lucky enough to be in work have seen their wages drop at more than twice the rate of the rest of the population. We're less likely to have a job than last year and if we do, we're getting paid less to do it.
But hey, maybe if we are all badly paid, things will be cheaper – like when you go to a festival in Croatia and a litre beer costs a pound. I'm afraid not. Inflation hit a five-month peak in June, so while wages go down, the cost of buying stuff goes up. In fact, inflation’s been above wage growth almost every single month since 2008, meaning people have been getting poorer for six years in a row now.
The gap between the amount of money you earn and how much that money is actually worth gets more depressing if you happen to be young. Incomes fell by 13 percent for those aged 22 to 30 over the last five years – double the rate of 31 to 59 year-olds. Unsurprisingly this is thanks to fewer hours in full-time roles, part-time jobs and being sucked into dead-end unpaid internships. One way to deal with this problem is of course to suffer living at your parents place until the world sorts itself out. The IFS reckons that a quarter of 20 to 34 year-olds now living at home. What this means is that today's youth are a generation of overgrown, impoverished children who can't stand on their own two feet without the state or their parents propping them up.
And those who can are still in a worse position than previous generations. 25-year-olds are about half as likely to own a house than somebody who was that age in the 1960s. We're all renting, and you hardly need me to tell you that means struggling to make payments for a place that you won't get to keep in the long run – and there's a reasonable chance that your rent is going towards someone else's retirement fund.
If you want to educate your way out of this hole, you’re also out of luck. The cost of education is increasing faster than anything else, thanks to tuition fee rises. Today it was announced that a renewed Tory government would raise them even further, making the cost of a course in Business Management an ever more dubious prospect.
All of this should be enough to make us do what we do best: drink and smoke ourselves into a carefree stupor. Weirdly, fewer young people are actually doing this than have in the last two decades. Maybe it has something to do with inflation being so determined to stop you having any fun. The cost of alcohol and tobacco has been increasing at more than double the average speed, adding about 60p to the price of a pack of fags over the last year.
Outside of a few short-lived student rebellions, we also seem to be the worst at fighting our corner. Unionised workers were much better protected during the recession and earn £4,000 more per year more their non-unionised counterparts, according to a recent government report. Nevertheless, union membership has been dropping for every age group, but it’s been falling much faster for young people – just seven percent belonged to a union last year, compared to more than a third in 1995. And with the government mooting making it even harder to strike, things aren’t getting better.
The same goes for the economy in general. The financial crisis was created because low pay and rising prices in the US meant people were borrowing lots of money to buy stuff they couldn’t actually afford. The debt just kept building and building until the people who were owed the money realised they weren’t going to get paid, everyone panicked and the banks collapsed, taking most of the world’s economy with them.
Sound familiar? That first stage is pretty much what’s happening again in the UK right now. In fact, even Vince Cable poured a bit of cold water on his government colleagues’ hard-ons last week, saying, "We cannot risk a repetition of the disastrous growth paths of the past, when it depended on consumption financed by growing personal debt, depending in turn on inflated house prices" – basically implying that currently that's exactly what we are doing.
Money is being lent at low rates to encourage people to buy houses and businesses to spend more. The economy is doing better and more people are in work, but prices are rising and we’re not seeing any increase in wages. What’s going to happen if we don’t fix the problem with pay and make sure young people share the benefits of the economic recovery? History says we’ll keep building up debt to keep our lives as bearable as possible until someone realises a whole generation is broke and can’t pay the money back. Then everyone’s going to go bust again, and it'll probably be young people who take the hardest hit.
Other times we've poured scorn on the economic recovery: