Will The Next Generation Be Poorer?

Countries around the world have grown richer over recent decades as millions of people are lifted out of poverty and into the middle class. But there are warning signs that the next generation will be poorer.

Building a better future

Working to build a better future is the staple dream of millions of people but its achievement has been downgraded from probable to improbable in recent years. Life is more difficult because the economy rewards fewer people as wealth flows to those who own assets rather than provide labour in the digital economy.

Economic data regularly confirms high levels of employment but doesn’t reflect the types of jobs or the terms, conditions or insecurities of what is on offer. Records rarely reconcile employment with the affordability of life, as house prices, education and child care costs soar. Living from one pay-check to the next is a growing phenomenon as the gap between wages and the cost of living widens.

Low interest rates mask affordability too, as any increase by the Bank of England from current historic lows will push countless households into jeopardy. House prices are rising faster than wages, even in areas where jobs are plentiful. When wages fall behind housing, education and other costs, the economy tips out of balance and society slips towards a crisis. As a result and for the first time the next generation will experience a lower standard of living than their parents.

Early warning signs

Early warning signs are evident in the number of young and not so young adults living at home long past the point when parent and child would wish it to be different. At a time when young people find it difficult to enjoy a better standard of living there is a yawning gap between the average person’s salary and the wealth of the rich who gain massively from the economics and structure of the digital economy. Coupled with such divergence is a reduction in job security as technology triggers a full-scale industrial revolution that affects every aspect of people’s lives and careers.

Previous economic disruptions brought upheaval for those caught in the maelstrom but this time it is different as each phase of the digital transition causes a perplexing sense of chaos. One solution is for people to develop new skills and find new roles and hope that the journey will be quick to minimise the stress suffered by communities and families. But the depth of disturbance sparked by the digital revolution makes it more of a hope than reality. And the lack of meaningful policy responses from government make it unlikely that answers will be found to protect people from the worst effects of the havoc.

So, for the first time in history the next generation will be worse off than the last as the digital revolution bites into every facet of the economy.