The Resolution Foundation has been examining mechanisms to help reduce wealth inequality between younger and older generations. Millennials have fallen behind older generations when it comes to income, wealth, and homeownership, and one think tank believes the answer is a payment equivalent to $13,500, which would be given out to people when they turn 25.
The recommendation was focused on British Millennials, though the analysis also involved examinations of their peers in other developed nations.
“We need not just some tinkering, but some big and dramatic solutions,” said Resolution Foundation deputy director Matt Whittaker, according to a report by CNN Money.
The £10,000 payment, equal to approximately $13,500, wouldn’t come without strings. Recipients could only spend the money on specific activities, including acquiring new skills, housing, entrepreneurship, or retirement.
An estimate suggests that the payments would cost around £7 billion ($9.5 billion) annually. Funding the program would require an overhaul of the UK’s inheritance tax system.
Other recommendations were put forth by the think tank, including rent control, increasing access to apprenticeship programs, and lowering taxes on home purchases.
“We built it as a package,” said Whittaker. “The idea is that doing one of these without the other would be good, but not as good.”
During their research, the Resolution Foundation discovered that Brits usually earned more with each subsequent generation. However, that trend stops with Millennials, who typically make less than Generation X.
“This stalling of generational pay progress is unprecedented,” said the researchers.
Britain’s recent vote to leave the European Union, which led to a spike in inflation, isn’t making the situation any brighter. Once inflation is taken into account, the Resolution Foundation stated that it would take about two decades for salaries to return to their pre-recession peak.
Centre for Economics and Business Research economist Ken Neufeld believes the payments would be “a massive leg up.”
He stated, “I think it would change a lot for a lot of people,” adding that it may encourage some to pursue college degrees or make home ownership a possibility.
A government spokesperson stated that the report was appreciated, but it is not clear whether the proposed changes would be considered.
The Resolution Foundation’s recommendation also does not address certain economic issues, like slow productivity, which are harming the UK.
“If we could fix the productivity problem, then it would make a lot of problems that we highlight easier to deal with,” Whittaker noted.