With Millennials shafted the world over, it’s time for a global revolt

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By Leith van Onselen

This site has frequently railed against the unfair treatment leveled at Australia’s Millennial generation.

This inequity is most apparent in the housing market, where today’s younger generations are being forced to pay far more than their parents to live in smaller and poorly located accommodation. But it extends beyond housing and includes a whole bunch of things like:

  • Importing large numbers of foreign workers in a bid to increase competition for jobs and lower overall pay and labour standards, as well as keep upward pressure on house prices, all under the cloak of “skills shortages”.
  • Related to the point above, the refusal by Australian businesses to take on new graduates and train local workers, as well as the increasing propensity for businesses to take on unpaid interns.
  • Failing to properly enforce Australia’s foreign ownership laws as they pertain to real estate, as well as deliberately failing to implement anti-money laundering rules on real estate gate keepers, despite promising the global regulator that Australia would do so in 2003.
  • Biased tax laws (e.g. negative gearing and the CGT discount) that encourages investor speculation and crowd-out first home buyers.
  • Failing to apply adequate means testing of the Aged Pension, despite it being the biggest and fastest single cost to the Budget and the wealth of those aged over 60 skyrocketing over the past decade at the same time as the wealth of younger Australians has declined.
  • Failing to adequately unwind overly generous superannuation concessions that overwhelmingly benefit the old and wealthy.

There are other points that I will have missed, but you get the picture.

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These inequities are by no means isolated to Australia, however. We have also seen similar issues at play in New Zealand and other Anglosphere nations, whose Millennials are also been shafted.

In November, Credit Suisse released its 2017 Global Wealth Report, which contained a whole chapter on the mistreatment of the world’s Millennial generation:

The Millennials have had an unlucky start to adult life, hit early on by the repercussions of the global financial crisis, alongside mounting student debt, tighter credit and rising income inequality…

They contrast with the good fortune experienced by the baby boomers, born in large numbers between 1945 and 1964, whose wealth was boosted by a range of factors including large windfalls due to property and share price increases…

Millennials are doing less well than their parents at the same age, with respect to incomes, home ownership and other dimensions of well-being…

Millennials are not only likely to experience greater challenges in building their wealth over time, but also greater wealth inequality than previous generations.

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Now, an analysis of eight high-income countries by the Resolution Foundation think tank found that millennials in their early 30s have household incomes 4% lower on average than members of so-called Generation X at the same age. From Bloomberg:

Britain and Spain stand out. In the U.K., Generation X were 54 percent better off than baby boomers born between 1946 and 1965. By contrast, millennials, born between 1980 and 2000, had incomes just 6 percent higher than those of Generation X at the same age.

The U.K. is also notable for the fall in rates of home ownership. For millennials in their late 20s, the figure is 33 percent compared with 60 percent for baby boomers at the same age. Smaller declines are found in Australia and the U.S…

Adjusted for inflation, pay for British millennials has fallen by 13 percent, a decline surpassed only by Greece, the think tank estimated.

Looking at other countries, the Resolution Foundation said the U.S. and Germany had seen minimal generation-on-generation gains. Typical incomes for Americans approaching 50 are no higher for those born in the late 1960s than those born in the 1920s.

We’ve said it before and we will say it again: Parliaments world-wide desperately need to be occupied by a dedicated youth political party to apply a lightning rod and to educate and mobilise their ravaged young.

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About the author
Leith van Onselen is Chief Economist at the MB Fund and MB Super. He is also a co-founder of MacroBusiness. Leith has previously worked at the Australian Treasury, Victorian Treasury and Goldman Sachs.