The old sometimes give the impression that the reason millennials struggle to buy a house is that they drink too many lattes and eat too many crushed avocados. The young sometimes suggest that the reason for their struggles is that baby boomers have taken everything for themselves.

Neither of these perspectives is correct. Millennials are certainly not getting the same deal that was on offer to young people 40 years ago. But the idea that this is because the elderly as a cohort have been cosseted is also far from the truth. It is a small group which has reaped the benefits of the changes since 1980 and an even smaller group which has driven them.

Millennials are not getting a fair deal

In 1980, the median earnings for full-time worker aged between 21 and 29 were just under £4,800 per annum. By 2017, that figure had risen to almost £24,000 per annum. At first glance, that sounds good – especially since tax rates were higher in 1980 than in 2017.

But that neglects two critical factors: the impact of inflation and the cost of housing. On an inflation-adjusted basis, the 1980 earnings would be only just under £20,000 per annum far closer to today’s level. And while the average house price in London was just over £24,000 in 1980 (£100,000 once adjusted for inflation), in 2017 it had risen to over £470,000. This means that the disposable income, after housing costs, for a young working person in 1980 was significantly higher than it is today.

Because of this combination of lower disposable income with more expensive houses, while it might have taken around seven years to save for a deposit in 1980, today it might take nearly 40 years. For many millennials, there is a serious risk of renting into retirement. And the problem cannot be solved by cutting back on lattes and avocados.

The elderly are also at risk

But it would not be to correct to think that the problem is because the elderly as a group have taken all the benefits of the growing economy for themselves. There are some extremely wealthy retired people in the UK, but there are also many in poverty. As the OECD wrote about the UK:

“Already today, poverty among older people is high in the United Kingdom: among those aged 75 and over, 18.5% have incomes below the poverty line, most of them women. The main reason is the low level of the state pension. With the introduction of the new single-tier pension – 30% higher than the old state pension – the situation should improve but there is a long transition period and current retirees will not see a difference. People who have had sufficient income during their working lives to save, buy their own home and contribute to private pensions have relatively good incomes compared to younger generations. However, retirees without such additional sources of revenue are left with few resources; this is reflected in the poverty rate and high income inequality in the United Kingdom for the over 65s.”

And the comparison with other countries is stark.

Those who have been on average incomes and who have no private source of income, will see an almost 75% reduction on retirement; and even those who were already poor (on 50% of average incomes) can expect to become almost 50% poorer.

A very small group has benefited from the changes

The principal reason that most millennials are struggling is simply that the deal on offer to almost everyone has become worse. If you are 70, you had a good deal for most of your working life; if you are 20, unless something changes, you will not get a good deal at all. And the beneficiaries are a small proportion of the elderly, and of the young. Here is how the share of total income going to the top 1% has changed over time.

Fortunately, the problem is not that the country is too poor – real GDP per capita is far higher today than it was in 1980 – so we can afford to create a good deal for the young. We just need to be prepared to take five, relatively simple steps.