Millennial men earning £12,500 less than the generation before them

Millennial men are falling behind the generation before them in their early careers, reflecting a shift towards young men doing low paid work traditionally carried out by women, according to the Resolution Foundation.

Drawing on upcoming research for the Foundation’s Intergenerational Commission, the think tank’s Director Torsten Bell will say in the annual Grigor McClelland lecture to Manchester Business School later today that millennial men have earned less than Generation X men in every year between the ages of 22 and 30, resulting in a cumulative pay deficit during their 20s of £12,500.

In contrast millennial women have experienced neither generational pay progress or decline. This has narrowed the gender pay gap for millennials – but for the wrong reasons.

The Foundation’s analysis highlights a shift towards lower-skilled jobs, often done part-time, as the key reasons for the stunted pay progress of young men.

Both men and women have been affected by a reduction in some traditional mid-skilled occupations over the last two decades, with a 40 per cent fall in young men (aged 22-35) doing routine manufacturing jobs and a 66 per cent reduction in the number of young women working in secretarial roles.

But while employment growth amongst women has been overwhelmingly transferred into higher-skilled jobs, for men the growth is much more evenly split between higher and lower paying occupations.

The research shows that the proportion of low paid work done by young men has increased by 45 per cent between 1993 and 2015-16.

This is in part driven by the number of young men in retail jobs having almost doubled, from 85,000 to 165,000. The number of young women doing these jobs has actually fallen over this period, though they remain significantly more likely to work in retail than men. The number of young men working in bars and restaurants has trebled from 45,000 to 130,000 since 1993.

The stunted pay progress for young men has been exacerbated by an increase in part-time work. The analysis shows that since 1993 the number of men aged 22-35 working part-time in the lowest paid occupations (basic admin, service and sales) has increased four-fold. The number of young women working part-time in these jobs has fallen.

The Foundation says that while the overall story of the UK labour market over the two last decades has been a positive shift away from low and mid-skilled jobs and into more high-skilled ones, young men in particular have not fully benefitted from this change.

It adds that a less gender divided pay distribution is a good thing, but young men seeing the world of work having less to offer them than their predecessors raises serious policy challenges – from education to the labour market. Crucially, in most cases, labour market outcomes are not zero-sum between the genders or generations.

Torsten Bell, executive director at the Resolution Foundation, said: “The long-held belief that each generation should do better than the last is under threat. Millennials today are the first to earn less than their predecessors. While that in part reflects their misfortune to come of age in the midst of a huge financial crisis, there are wider economic forces that have seen young men in particular slide back.

“Millennial men have earned less than the generation before them in every year of their working lives – a pay deficit that adds up to £12,500 by the time they reach 30. This is in part due to major shifts in the world of work with many more young men moving into lower skilled jobs in shops and restaurants, and doing many of those jobs part-time.

“The fact that young women have bucked this trend by moving overwhelmingly into higher-skilled roles is welcome and suggests that the disruptive force of automation has met its match in the forward march of education and feminism.

“But if the last year has taught us anything it is that we need to look beyond the headlines of rising employment, to recognise the challenges posed to groups of workers that are left behind. Policy makers need to recognise the frustration that can follow from finding that Britain does not have the opportunities you had hoped or indeed seen previous generations enjoy.”

Mr Bell’s lecture, on 21st century inequality, will on the labour market prospects for younger generations.