Young adults face tougher start to adulthood

Young adults in their twenties are encountering a more difficult transition into independent life than any generation in nearly fifty years. This is according to an analysis of United Kingdom data concerning housing, employment, and wealth, conducted for the BBC.

Housing Hurdles for a Generation

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A key finding of the analysis, which compared crucial metrics for different generations at age 25 stretching back to the early 1980s, is the dramatic decrease in home ownership. The proportion of 25-year-olds owning their homes has fallen from 43% in the mid-1980s to just 15%. This decline is attributed to escalating housing costs, which now represent a larger portion of income for renters or mortgage holders in their twenties than for their parents or grandparents. The rising expenses associated with running a home, including utility bills, have exacerbated the situation. Consequently, the number of 25-year-olds living with their parents has climbed from 25% in the 1990s to 42% currently. This presents challenges not only for young adults but also for their parents, whose own lifestyles and future plans can be impacted by having adult children living at home.

Adam Daytona, aged 26, shared his experience of moving back in with his parents this year, stating, "I think there's no world where it's normal to be 26-years-old still living at home. It's unfair on me, it's unfair on my parents." He added that this situation has affected his social life, noting, "So it would have 100% affected that part of my life, which does get me low, obviously." His parents, Jane, 57, and Neville, 64, commented on the difficulties faced by their son, saying, "I think it's very difficult for them. They're not able to buy houses like we were able to."

Employment and Wage Stagnation

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The analysis also highlights a dip in employment rates for individuals in their twenties compared to preceding generations. This jobs squeeze has been particularly noticeable among young women, who had previously seen increasing workplace opportunities. The current cohort of 25-year-olds is the first to experience a reduction in employment rates, which have fallen from 77% a decade ago to 71%. For young men, the decrease is also significant, with employment rates dropping from 84% to 76% over the same period. Factors such as the high volume of job applications required for success, the frequency of job losses, and the emerging challenge of artificial intelligence in the workplace are contributing to a more precarious start to working life for this generation.

Daisy Edwards, 25, found herself back home with her parents after losing her job in London. She described the immediate financial strain, stating, "I'd had a few job interviews but I really committed to job searching. I was applying for maybe five or six jobs a day sometimes." Her father, Dave, contrasted this with his own career path, remarking, "That's a big difference to me having worked in the same company for 32 years. I've only ever had one job interview and I'm still there."

While those 25-year-olds who are employed may earn more in nominal terms than their parents did at the same age, real wage growth has stalled. After substantial increases from the 1980s to the early 2000s, averaging around £28,526, this growth ceased. Jonathan Cribb, deputy director of the Institute for Fiscal Studies (IFS), described the situation as "stagnation." He explained, "It's not that these people are worse off than those that came before them, but it's that they're no better off and that progress has stalled." Wages for 25-year-olds, after adjusting for inflation, are now just above £28,000. This lack of wage progression, compounded by economic shocks, the pandemic, and the cost of living crisis, disproportionately affects individuals at the beginning of their careers. The mismatch between societal expectations of generational progress and the current reality leads to considerable disappointment.

Rachel Diamond, 23, who moved for her graduate engineering role, earns in the early £30,000s but finds herself unable to save due to high rental and utility costs. She commented, "I don't think people realise how expensive it is to rent." Her father, Paddy, noted the similarity to his own early career struggles but acknowledged that the situation for Rachel is likely harder, recalling how he bought his first flat in his early twenties on a £20,000 salary for £36,000.

Future Prospects

There is a possibility that members of this generation will eventually achieve these markers of adulthood, albeit at a later stage. It is anticipated that salaries and employment rates may improve as this group progresses into their thirties. However, the immediate outlook suggests continued challenges for young adults navigating the early stages of their careers and independent lives.