High rents are destroying young people’s incentive to move for better paying jobs, says report

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YOUNG people are becoming less likely to move around the country to take better paying jobs because high rents are destroying the financial incentives, says a new report.

Typically seen as ‘footloose and fancy free’, the traditional image of young people moving to take higher paid work, enjoy the associated independence, and generally get on in life, is effectively grinding to a halt, according to the Resolution Foundation.

The thinktank’s report, Money Matters — funded by the Nuffield Foundation — claims that young people (aged 25-34) are less mobile today than they were 20 years ago.

“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,” said Lindsay Judge, senior policy analyst at the Resolution Foundation.

“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.”

The report found that the number of young people starting a new job and moving home in the last year has fallen from 30,000 in 1997 to 18,000 in 2018.

According to the Resolution Foundation, this is “all the more surprising” given that young people today are far 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 fostering mobility.

Instead, 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.

Rather, it’s the diminished financial incentive that is behind this decline in job and home mobility.

According to the Resolution Foundation, this 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, it claims.

But it also reflects the fact that private rents have risen fastest in higher-paying areas of the country – rising by almost 90% among highest paying local authority areas, compared to just over 70% among the lowest paying.

Once housing costs are factored into the equation, this has significantly reduced any potential rise in living standards from moving for work.

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% cent 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.

Such challenges are also not limited to young people, with increasing house price gaps between places making it harder for older homeowners to move without also having to downsize to a significantly smaller property.

However, with the typical pay rise (before housing costs) for those moving areas for work over three times higher than for those who stay in the same job, the Resolution Foundation said that lower job mobility can stunt young people’s pay and career prospects.

It adds that lower job mobility is bad for the economy as a whole – making it harder for firms to fill skills gaps, and for workers to gain new skills. Preventing high housing costs acting a barrier to job mobility should therefore be a priority for policy makers, the thinktank said.

Responding to the report, the Local Government Association (LGA), which represents councils in England and Wales, urged the Government to support councils to deliver more affordable homes.

“The housing crisis is forcing families and young people to make difficult choices and in the process is holding back growth. This report reveals the extent to which this is impacting on the opportunities for young people unable to move,” said Councillor Martin Tett, the LGA’s housing spokesperson.

“The Government needs use the Spending Review to give councils the powers to build the right homes in the right places to meet local need and boost affordability. Planning departments also need to be adequately resourced and councils empowered to address local skills gaps, working with local partners and choosing where and how they can invest in skills training.

“In order for local communities to thrive, councils must be at the heart of any decision-making to support the growth of good jobs and the rights skills for young people.”

John Healey MP, Labour’s shadow housing secretary, said: “This is proof of how badly the Tories have failed private renters. Labour is committed to giving renters the rights they deserve, including control on rents, indefinite tenancies and new legal minimum standards.”



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