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Age reported as key dimension of who was hit worst in recession

by on July 17, 2014

Much reported over the last two days in the UK press is the recent report by the Insitute of Fiscal Studies.  Their own website sets out the headline news: “The recession and its aftermath have been much harder on the young than the old. The employment rate of those in their 20s has fallen, while employment among older individuals has not; and real pay among young workers has fallen much faster than among older workers. As a result, young adults’ real incomes have fallen much more than any other age-group”

For regular readers it will probably go without saying that the vagueness of the categorisations of younger and older here are somewhat frustrating – particularly when it is these overall summaries that form the headlines in the widespread news coverage.  For example the Telegraph went with the headline “Pensioners have never had it better” while the Guardian led with “Young adults ‘bearing brunt of recession’ although they subheader was the slightly confused ‘Institute for Fiscal Studies finds people in age group have found jobs hard to find’.  Which age group is that again?

The IFS are clear to point out that their report uses “The main measure of income used in our analysis is net household income, which is ‘equivalised’ to take account of differences in household size and composition. ”  However this is not a straight-forward measure and does present some problems and it also interesting that ‘Inequality across age spectrum’ is the only dimension analysed here – while of course there may be many other issues to take into account.  For example the report states recent  “Recent years have seen the incomes of those in work fall relative to the rest of the population, as earnings have risen much less quickly than prices. This has reversed some of the increased inequality between rich and poor, but contributed to further increases in the incomes of the old relative to those of the young”.  To present the ‘old’ as ‘winners’ here in the respect to the young; in a similar comparison to that between ‘rich’ and ‘poor’ seems quite inflammatory.  Surely it seems likely that the rich old and the rich young are still the winners against the poor of whatever age?  Who are the young in any case?  Further reading suggests that the young here are a group categorised as 22-30 – very different categorisation of, for example, youth unemployment which the ONS classify as 16-24.

Later in the report they highlight that “Parents’ incomes, which have been relatively stable, may have provided important insurance against falling personal incomes for some young adults since the start of the Great Recession”.  So is this really a case of different age groups working together rather than in competition?  Closer reading suggests that the key issues here is housing costs – so, I suggest that, IF you own you home outright (whatever age) your relative income is significantly higher than IF (whatever age) you do not, and it seems particularly if you are renting.  This is my own take on the data presented in p45 and 46 of the report – again from a relatively superficial first read.

I have only so far skimmed the 133 page report – which, despite my comments above, obviously a really useful and potentially informative analysis of a variety of income related statistics.  However we fear that summaries and headlines which pitch ‘old’ vs ‘young’ in a stereotyped battle are sadly hiding more issues about inequality than they reveal.

 

 

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