Jan
2025
Mr Brightside: The Blank Generation
DIY Investor
14 January 2025
“I belong to the blank generation and
I can take it or leave it each time, well”
Today we look at the overall economic picture facing those referred to as “Millennials” or “Gen Z, those born between the mid-1980s and early 2010s
Many are part of the C.5-million graduates working in non-graduate roles, and never benefitting from the so-called graduate premium of earning more than their contemporaries. New research from the Resolution Foundation shows that new graduate salaries have fallen sharply in real terms over the past two decades, while the minimum wage has risen slightly.
This is part of a bigger story; the British middle-class dream is falling apart as new graduates are unable to join its ranks. There is a shrinking core who came of age when the graduate premium was still high and enjoy high wages, own their homes and remain insulated from the worst effects of government policy. Instead, large numbers of Gen Z have become “proletarianised”, suffering the shock of downward social mobility, facing stagnating wages and saddled with enormous debts and a high marginal rate of tax, and are often worse off that their parents.
‘the British middle-class dream is falling apart as new graduates are unable to join its ranks’
As a result, many are either renting or living back home with Mum and Dad. For many progression is an illusion, they studied hard for a life of permanent debt and struggle.
Traditionally, the middle class had a stabilising effect on society. and its decimation is driving structural change in modern politics. The Tories, through their ruinous economic policy decimated its own base, digging its own political grave. If Labour does not change anything soon, it will do the same.
These are the same economic conditions that drove many millennials to support Jeremy Corbyn’s version of Labour. Today, they appear electorally insignificant in Starmer’s iteration of Labour. Perhaps he still believes that they can be abandoned because they have nowhere else to go. This might have been true in previous years, but the appeal of Reform to the white working class is very real. If not Reform it is the Greens. It was young, downwardly mobile graduates voting for them that caused the collapse of the Labour vote in places such as Bristol.
They are, in effect, the next red wall.
‘For many progression is an illusion, they studied hard for a life of permanent debt and struggle’
Deindustrialisation stopped us making and transitioned the economic model towards finance and rentiers. As this continues, what do graduates turn to? Many now working alongside non-graduates could soon be in call centres, Amazon warehouses or hospitality. Our so-called “knowledge economy”, is as illusory as Potemkin’s villages.
AI is the next big thing and the government is 110% behind it. I can understand the need to do so, but there will be consequences – there always are!
One of the many criticisms of our economic performance in recent years has been productivity, partly due to low investment in new technology.. The IMF has predicted that AI will increase productivity by up to 1.5% a year.
As a result, wages should increase creating spare capital. In theory, we won’t need so many workers to do certain jobs allowing capital to be invested elsewhere. This will help our ageing population, allowing us to cope with fewer working-age adults in the future.
However, all this efficiency driven by AI means redundancies. The Tony Blair Institute (TBI) has suggested that >40% of tasks performed by public sector workers could be automated partly by AI and the government could bank those efficiency gains by “reducing the size of the public-sector workforce accordingly”.
In addition, the TBI also estimates that AI could displace between 1m and 3m private-sector jobs in the UK, though it stresses the net rise in unemployment will be in the low hundreds of thousands because the technology will create new jobs, too.
‘AI could displace between 1m and 3m private-sector jobs in the UK’
The creation of new jobs is always meant to follow the latest tech boom, historically it rarely happens as predicted. Where does all this excess employment go?
The most recent home for them has been the “gig economy”, where business hires independent contractors and freelancers instead of full-time employees. Basically, a job without a job, and no ancillary benefits such as sick pay and holidays. Also, the government loses out because if you don’t employ people you don’t pay employers NIC.
But, the abuse doesn’t stop there: retail assistants are being made to pay a fee if they want to receive their wages within 30 days.
A new payment system brought in by YoungOnes, which supplies “freelance” retail assistants to many well-known high street stores, charges gig workers 4.8% of their earnings to be paid in one minute or 2.9% to be paid in three days. If they decline, they typically have to wait 30-days. Previously the workers were paid in three days, without a charge.
This is, perhaps, the tip of the iceberg, as worker fears that companies could seek to evade protections laid out in the government’s flagship employment rights legislation by recruiting gig economy workers. Liam Byrne, chair of the business and trade committee, which is examining the government’s employment rights bill, said: “We’re deeply concerned that companies will try to get around the law and continue to exploit vulnerable workers by pretending they are self-employed when they should enjoy the full protection of the law.”
The bill will bring in a range of new workplace rights, including immediate protection from unfair dismissal and the right to guaranteed hours for anyone on zero-hour contracts. It will also abolish the waiting period for statutory sick pay, set at the first three days of illness, and give workers the right to unpaid paternity and bereavement leave as soon as they start a new job.
The bill the exclude the estimated 4.4 million people working in the gig economy.
‘Low- to middle-income families in Britain are far poorer than their counterparts in western Europe because of sky-high housing costs’
The result of all these issues is increasing poverty rates. Low- to middle-income families in Britain are far poorer than their counterparts in western Europe because of sky-high housing costs, according to an analysis by the Resolution Foundation.
Their research shows that whilst prices in the UK are 8% higher than the average in the 38 member OEC countries, Britons were more impacted by the cost of housing, which is 44% higher in the UK than the OECD average.
Interestingly, food, another major area of spending for those on lower incomes, is 12% cheaper than the average in those developed countries.
When lower-income families’ tendency to spend more on necessities and less on luxuries is factored in, German families are 21% or £2,300 a year better off than their UK equivalents and the gap with Dutch families is even wider, at 39%.
Simon Pittaway, a senior economist at the Resolution Foundation, said: “While food and clothing are relatively cheap, the sky-high cost of housing – which accounts for almost a quarter of all spending by lower-income households – makes Britain a particularly pricey country for poorer families.”
Despite the Covid pandemic, a cost of living crisis and an increase in mortgage costs, UK house prices are up by>25% in 5-years, and are expected to continue to rise this year.
‘UK house prices are up by>25% in 5-years, and are expected to continue to rise this year’
Rents have also been rising, up 9.1% in the year to November 2024, according to the ONS, and they are predicted to increase by up to 4% this year.
Nearly two-thirds of workers living in private rented housing in England struggle to pay their rent, according to a recent study.
All of this presents a presents a political opportunity. A recent briefing by the World Economic Forum stated that if this new generation of devastated white-collar workers linked-up with the blue-collar workers gutted by the first wave of deindustrialisation in the 1980s and 90s, it could trigger a political revolution.
The question is will the opportunity be grasped by a progressive party, or will all this popular anger be funnelled to the hard-right?
‘what we are seeing is society creating a system where worker’s lives are so miserable and devoid of justice, that the natural answer is socialism’
In many ways, what we are seeing is society creating a system where worker’s lives are so miserable and devoid of justice, that the natural answer is socialism, just as it could have been post-WW1. Unfortunately, while Russia turned to the left, much of Europe looked to the right
Looking back to that era, it was America that showed the way forward. Under President Rosevelt, capitalism was saved because he realised that the primary threat to capitalism wasn’t from Soviet Russia, it was from the wealth inequality that left the masses impoverished. His New Deal reworked the system to enfranchise the masses by providing properly paid work for them.
The working classes’ so-called populist saviours are planning to undo this, withdrawing the social safety nets and unleashing unregulated, unrestrained capitalism on society, further exacerbating inequality.
In 2017, when Trump was campaigning for his first term he told people: “Don’t move. Don’t sell your house. We’re going to fill up those factories – or rip ”em down and build brand new ones”.
Eighteen months later, in north east Ohio, General Motors (“GM”) announced that it was suspending operations, putting 5,000 jobs at risk. Trump said the closure didn’t matter, because the jobs would be replaced “in, like, two minutes”. They weren’t!
‘voters feel they face a bleak future’
In 2020, although he lost to Biden, he won the popular vote in this part of Ohio, and in November, he extended his margin there to a decisive 13 points.
The decline of this area isn’t unusual, and voters feel they face a bleak future. They feel that the political class is corrupted by big-money donors who don’t care about communities like theirs. White voters harbour a sense of injustice at the expense of racial minorities, the children of immigrants, women worried about losing their reproductive rights and for transgender teenagers. They ask why nobody ever talks about justice for them?
Bizarrely, few expect Trump to fix everything. Instead, they him when he says the system is broken and corrupt, and that his promises to tear it down and start again might just help them.
In their eyes, Trump isn’t someone who pretends to be anything other than what he is. They prefer this perceived authenticity to the carefully scripted messaging of Democrats like Kamala Harris or even mainstream Republicans.
‘Trump isn’t someone who pretends to be anything other than what he is’
Much of this disenchantment goes back to the failure of Democrat presidents Clinton and Obama, to address the catastrophic impact of international trade agreements on manufacturing jobs, which was followed by Obama’s failure to take any meaningful action against Wall Street after the GFC.
A significant contributor to the GFC was the increasing deregulation of the banks, which, along with lower corporation tax, and weak climate commitments, is expected to be a major part of Trump II.
Trump’s anti-green agenda could enable the banks to further grow profits as they rush to finance fossil-fuel-friendly industries, as part of a growing backlash against ESG goals from US politicians, particularly those on the right of the Republican party. Officials in Texas have started to penalise financial firms that promote their green credentials, with the state’s comptroller having added NatWest to a growing list of firms accused of boycotting its oil industry last summer.
Bank such as JP Morgan could their climate pledges, saying they would “use the word ‘commitment’ much more reservedly in the future, clearly differentiating between aspirations we are actively striving toward and binding commitments”. A number are also expected to leave the UN-sponsored net zero banking alliance, which helps lenders to reduce their carbon footprints.
“I never liked Trump even when he was only a builder in New York … because he stiffed union workers and he generally seemed like a douche bag”
One regulation the banks will hope to see cut is the so-called Basel III rules, which are meant to ensure banks hold enough capital to absorb potential losses. US bank lobby groups been campaigning against the capital requirements, and regulators had begun caving in under the pressure. In September, the US Federal Reserve slashed a planned capital increase to 9% in September, less than half the 19% proposed.
Trump is the poster boy of the new right. Where he goes politicians in other countries will follow. The failure of past economic policy which led to deindustrialisation and job losses are still being felt by blue collar workers whose jobs weren’t replaced. AI will have a similar impact on white collar workers. These are the disappointed, the left-behind who are currently embracing Trump and other fascist politicians.
I will leave the last word to Tim O’Hara, a former president of the United Auto Workers (UAW) union…
“I never liked Trump even when he was only a builder in New York … because he stiffed union workers and he generally seemed like a douche bag,”. One thing I wasn’t then and I’m not now is a racist, misogynistic, uninformed dipshit who enjoys supporting a rapist, felon, traitor … These people have no clue yet what they’ve done, but they will find out.”
“Ain’t it fun when you know that you’re gonna die young”
‘Some familiar themes, but looked at from a different direction….the song remains the same but the lyrics are different.
This time we focus more on Gen Z, many of which are graduates, doing non-graduate jobs, and not getting the graduate premium they envisaged.
As is well documented many will be worse off than their parents who, in many cases, they are still living with as they cannot afford rent let alone buy a home.
Many are part of the gig economy, where a job isn’t a job. From what I can see it is used by governments to give the illusion of full employment, when, in reality, 4m people have something that might resemble a job but not in a way many of us would recognise.
It reminds me of that famous saying; “ever get the feeling you’ve been conned?”
They are part of the dwindling middle-class. The majority have already deserted the Tories, and, unless something drastic changes, they will desert Labour too.
Trump’s US provides a picture as to what might happen. As with Johnson, people turned to an insurrectionist in the hope that they might tear it all up and start again.
Gen Z seems especially demoralised, with 20% preferring strong leaders without elections to democracy, and voters overall are feeling downbeat about politics, a report has found.
The poll, part of the FGS Global Radar report, found that overall 14% of people agreed with the statement: “The best system for running a country effectively is a strong leader who doesn’t have to bother with elections,” rather than the alternative: “The best system for for running a country effectively is democracy.”
That rose to 21% of people aged between 18 and 45, who answered that the best system was a strong leader without elections. In contrast, only 8% of people over 55 preferred that system to democracy.
The report’s findings, that a sizeable minority of under-45s are unconvinced by the need for elections, come as some electorates have been opting for populist leaders, such as Donald Trump, through the ballot box, and the billionaire Elon Musk has been wielding power over public debate by shaping what is seen on his social media platform X.
The FGS report polling found that men were more likely to lean away from democracy than women, at 17% compared with 13%, and Reform UK voters were fractionally more likely to do so than voters for other parties, at 17% compared with Labour voters at 16%, Conservative at 14%, Lib Dem at 9% and Greens at 8%.
If nothing else, these next 12-months will be interesting.
Lyrically we start with the “Blank Generation” by Richard Hell, we end with Dead Boys and “’Aint it Fun”.
Enjoy!
Philip’
@coldwarsteve
Philip Gilbert is a city-based corporate financier, and former investment banker.
Philip is a great believer in meritocracy, and in the belief that if you want something enough you can make it happen. These beliefs were formed in his formative years, of the late 1970s and 80s
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