High rents are making millennials less job mobile
Higher rents are reducing the financial gains from moving to better paying parts of the country, and mean that young people are less mobile than they were 20 years ago, the Resolution Foundation has found.
It’s ‘Moving Matters’ report funded by the Nuffield Foundation, showed the number of young people (aged 25-34) starting a new job and moving home in the last year has fallen from 30,000 in 1997 to 18,000 in 2018.
This is surprising given young people are more likely to live in private rented accommodation rather than own a home or live in the social rented sector – the tenure traditionally seen as enabling mobility.
Jeanette Makings, head of financial education at Close Brothers said: “Housing is a key area of financial wellbeing, and it’s heartening to see that employees record a relatively strong score here. However, there seems to be a gap between perception and reality.
“While there’s confidence around affordability, a huge proportion of people’s salaries are going on housing costs. This makes saving for the future more difficult and contributes to the scale of uncertainty when it comes to taking the first step onto the property ladder.
“All of these issues can be improved by a solid financial education programme, supporting employees in their ambitions be they short or long-term. Employers can help employees in this respect, improving their financial health and creating a happier and more productive workforce.”
In fact, young private renters’ propensity to move areas for work has fallen by two-thirds over the last 20 years. While a greater share of private renters today have children, which can make it harder to move, this only explains a tiny part of the fall in job mobility for young private renters.
Instead, Moving Matters identifies an alternative explanation for falling job and home mobility – the financial incentives for moving are lower.
That is partly good news as the country has seen employment gaps fall, meaning fewer young people are forced to move away from employment black spots to find work. The average gap between highest and lowest employment areas of the country has fallen by almost a fifth since 2000.
But it also reflects the fact that private rents have risen fastest in higher-paying areas of the country – rising by almost 90% among the highest paying local authority areas, compared to just over 70% among the lowest paying.
This has significantly reduced the living standards uplift from moving for work once housing costs are factored into the equation.
The report finds that once housing costs are deducted, the average private renter moving from a low-paying area, such as East Devon, to a mid-paying area, such as Bristol, would have seen a financial gain of 16% in 1997, compared to just 1% last year.
Similarly, moving from a low-paying area straight to a high-paying area, such as Croydon, would have seen a financial gain of 26% in 1997, compared to minus 3% last year.
Lindsay Judge, senior policy analyst at the Resolution Foundation, added: “Young people today are often stereotyped as being footloose when it comes to work. But in fact they are moving around for new job opportunities far less frequently than they used to.
“A key reason why people move around for work is the lure of a bigger salary. But increasingly those pay gains are being swallowed up by high housing costs.
“Of course there are many good reasons why people don’t want to move around for work, from better job opportunities closer to home, to wanting to stay closer to friends and family.
“But for young people in particular, there are real advantages to moving when it comes to trying new roles and developing skills – and housing should not be a barrier that prevents them doing this.”