What year were you born? In Britain, the answer plays a significant role in determining wealth.
Britain is an incredibly wealthy country, but that wealth hasn’t been distributed equally across generations. That’s the conclusion of a recent report by the think tank Resolution Foundation, which lays bare stark wealth inequality. The report found that an adult born between 1981-85 had half as much total net wealth (similar to an individual’s net worth) at age 30 as an adult at the same age born just five years before them.
Wealth inequality doesn’t just affect millennials (those born between 1981 and 1995). An adult in the second-youngest baby boomer cohort (those born 1956-60) has 7% less wealth as an adult at the same age born just five years before them. In fact, generational progress on wealth accumulation has reversed for all cohorts born after 1955.
Overall, baby boomers hold over half of the country’s wealth. Millennials, on the other hand, hold just 2%. This is not surprising. Young people are usually less wealthy than older people because wealth accumulates over a lifetime, peaking at retirement age, the age most baby boomers are today. Still, millennials are believed to have lowered prospects for accumulating wealth and that contributes to a growing generational divide.
Housing is the main problem. Those who bought a home during the property boom of the 1990s and early 2000s enjoyed a £2.3 trillion ($2.9 trillion) windfall, according to the report. While rising property prices enriched older generations, they priced out younger Brits from home ownership.
When discussing inequality, most have focused on household income, but the Resolution Foundation focuses instead on wealth per adult. Wealth inequality is almost twice as high as the inequality of household income, the report notes.
This generational, wealth gap has trickled into politics. Ipsos Mori, a UK polling company, said age was a bigger dividing factor in the 2017 general election than any election since its records begun in 1979. The Labour Party saw a surge in support, increasing its vote share among people aged 18 to 34 by 20 percentage points. The Conservatives, who ended up the biggest party, but failed to win a majority in parliament, saw a 7-point gain in voters aged 45-54 and a 14-point increase in those aged over 55.
This is perhaps unsurprising; the Labour Party pledged(pdf) to build over one million more homes, with at least half for social rent, guaranteed help for first-time buyers until 2027, said it would ensure that locals buying their first home would get “first dibs on new homes built-in their area.” In contrast, voters aged over 55 have benefited from policies that pushed up property prices and generous pension arrangements that ensure their incomes rise in inflation-adjusted terms.