Thirty-somethings paid 7% less than pre-financial crisis
Pay for this age group remains 7% below its pre-crisis peak, according to think tank the Resolution Foundation.
Resolution’s latest ‘Earnings Outlook’ shows that workers who were in the twenties during the financial crisis have been the worst affected by what they describe as “the real pay squeeze” brought about by the financial crisis.
Their earnings have fallen 11% from peak to trough, and are now the furthest from pre-crisis levels.
The think tank warns there are worrying signs that the aftermath of the financial crisis has had lasting, “scarring” effects on their earnings. This could make it harder to cope with the income pressures they are likely to face in their thirties, including raising children.
In contrast, it spotted signs of strengthening pay for those in their twenties today. In addition, the pay of workers aged 50 and over stands above pre-crisis levels.
However, typical pay levels for all workers remains 3% lower than pre-crisis levels.
Wage growth emerges
On a positive note, earnings growth started to recover in early 2018, following a pay squeeze the previous year. The Resolution Foundation anticipates that pay could continue to strengthen in early 2019 towards 1.5%, as inflation eases and nominal pay growth remains above 3%.
This would represent the strongest pay growth since the European Referendum in 2016. However, it is still below the pre-crisis average of 2.1%.
For workers of all ages who are looking for stronger pay growth, the outlook provides evidence that ditching your current employer could result in a 4% ‘disloyalty bonus’.
It found that people who stayed in the same job last year enjoyed real pay growth of just 0.5%, compared to 4.5% for those who changed job.
While this could help people who are in their thirties to boost their earnings, the think tank found that people in their thirties and forties tend to move jobs around half as frequently as people in their twenties. For example, just 0.7% of workers in their thirties and forties voluntarily moved jobs last year.
Nye Cominetti, economic analyst at the Resolution Foundation, explained: “Britain has experienced a truly horrendous decade for pay, but an increasingly tight labour market is finally starting to deliver a pay recovery. Whether this recovery continues to build momentum in 2019 will depend in large part on what happens with Brexit.”