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No country for young men?

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In decades gone by paid work was a thing that men did. Families, the world of work and the welfare state were structured to make this the norm. But this mid-20th century certainty is no more. Women in the UK are participating in the labour market in ever greater numbers with the gender employment gap now at a record low. This is good news.

But rising female participation hasn’t been the only big labour market shift over the last 50 years. There has been a massive upheaval in the nature of work carried out too. The classic mid-skilled jobs of the past – secretarial and routine manufacturing jobs – are in long-term decline and won’t be coming back (no matter what President Trump says). This has huge consequences for the career prospects of younger generations (a key theme of our Intergenerational Commission) but also for how different genders experience the world of work.

One of the key motivations of the Commission was a growing sense that the promise that new generations would do better than those who have gone before is at risk of not being kept. And the evidence so far bears this out.

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The profound progress in pay made by the first four generations born in the 20th century came to a grinding halt for the millennials (those born between 1981 and 2000), as the chart above shows.

This is partly a result of bad luck. The onset of a global financial crisis in the late 2000s, just as many millennials were leaving college or graduating from university, was unalloyed bad news for the young. But, as our new research shows, the stark gender differences in millennial pay suggest that other factors are at play.

Of course, the millennial generation doesn’t have it all bad. Crucially, in terms of their lifetime living standards, they are more likely to go to university than any previous generation. Women in particular have benefited from the expansion of higher education. This may suppress their pay during their 20s, as they start their careers later, but on average it will boost their earnings in the long term.

So how have millennial men and women fared in terms of their earnings so far? Looking just at employees, young women have fared no better, or worse, than the generation before them.  This is a disappointing return considering the strides they’ve made in education.

But the situation for young men is much worse. Millennial men have earned less than men in Gen X in each year of their 20s (we look here at men aged 22-30 to reduce the compositional effects of increased years spent in education as outlined above). In fact, if you add up this pay deficit it totals a striking £12,500 by the time young millennial males reach 30. It’s true of course that millennial men still earn more than millennial women but the pay gap is closing, albeit for the wrong reasons.

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So why are young men struggling to match the pay levels of their predecessors? Let’s return to shifts in the nature of work being carried out. Between 1993 and 2015-16 there has been a 40 per cent reduction in the number of young men (aged 22-35) doing routine manufacturing jobs and a 66 per cent fall in the number of young women working in secretarial roles.

So what are they doing instead? Employment growth amongst women has been overwhelmingly found in higher-skilled jobs. However for men the growth is much more evenly split between higher and lower paying occupations.

Zooming in on the two lowest paid occupational groups of sales and basic service jobs, we can see that the employment growth here is based on increases in the number of young men working in these two sectors. Part-time work has driving much of this increase. In fact the number of men working part time in these sectors has increased four-fold since 1993, while the number of women (both younger and older) working part time has fallen.

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Looking in more detail at the specific occupations within these two broad categories we can see that the number of young men in retail jobs has almost doubled, from 85,000 to 165,000 and that the number of young women doing these jobs has actually fallen over this period, though they remain significantly more likely to work in retail than men. The number of young men working in bars and restaurants has also trebled from 45,000 to 130,000 since 1993.

Considering the earnings distribution as a whole we can see that young men now comprise a larger share of the lower paid deciles, and a smaller proportion of the higher paid deciles. In fact, proportion of low paid work (in deciles 1 and 2) done by young men has increased by 45 per cent between 1993 and 2015-16.

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In one sense this is a story of female progress on a massive scale. Women are leaving low paid occupations in their thousands. As public policy has supported female employment, with better maternity and childcare policies, and cultural norms have shifted, more women are finding work that pays a good wage.

But, on the flip side, the fact that the UK has a large low-paid service sector economy is something that increasing numbers of young men will now be able to testify to. It’s good news that low paid roles are now more evenly shared between men and women but the way in which this is happening raises serious concerns about what the world of work has to offer some young men.

We should be seeing both men and women in the youngest working generation do better than the generation that went before them, and more of the gains accruing to women as their relative position in the labour market improves. But instead, young women are seeing a lack of generational pay progress and they are only catching-up with their male counterparts because of a deterioration in outcomes for young men.

Until robots can stack shelves or serve pizzas, there will always be a lot of work to be done in the UK’s low-paid service sector. The burden of low paid work is becoming more gender balanced but it is far from being eliminated. More robots rather than less would help in this regard.

For now, and for the sake of both genders, we need to focus our attention on boosting productivity in these jobs, creating more routes up within low paying sectors and on out of them, and improving skills to enable more people to by-pass these roles altogether. That will help us to deliver the long-standing promise of progress from generation-to-generation that no-one wants to break.