NII: Young People Grew Much Poorer Over the Past Decade

Older people, meanwhile, got richer, thanks to lower tax rates.

Young people have been pushed increasingly into the ranks of the poor over the last decade, due to the rising cost of housing and an erosion of government support.

Reduced tax rates over the decade, on the other hand, benefited mainly older Israelis with higher incomes. These are among the key findings of a soon-to-be-published article by the head of research at the National Insurance Institute, Daniel Gottlieb.

Gottlieb delineated the causes of the social justice protest movement over the past year, and found statistical support for the frustration felt by many of the country's young people. Based on his findings, he is recommending that tax rates be returned to their higher levels in 2004 and that state income support be increased, particularly for families with small children.

Among the economic indicators Gottlieb looked at was home ownership. He found that the percentage of people under 35 who owned their own apartment or house declined by 15% over the decade. The decline was seen among young people from every income level, however, and not just among the lowest 20%, who are considered poor.

During the same period, however, home ownership among those 55 or older increased by 5% to 20%. The largest growth in home-ownership among this older age group was surprisingly among the poor.

The inability of many young people to buy an apartment caused demand for rental housing to increase. Monthly rents rose by 25% over the last decade for young people, and by about 50% for those between 35 and 54 years old. And for the under-35 poor, on average, the rent exceeded their net household income.

During the decade, educational expenses also rose substantially. This was especially true for those under 35 who were also in the lower 40% of earners.

At the same time, Gottlieb found that eligibility for government stipends decreased during this period. Unemployment benefits, for example, were reduced in 2003, primarily for young people, creating a situation whereby virtually no young working people are entitled to unemployment compensation. This is the case even though unemployment rates are higher among the young than any other age group.

Furthermore, the sweetener that the state provided in the form of tax cuts in return for a reduction in government spending was not a good bargain for the younger generation.

Gottlieb demonstrated that women's highest wage-earning years tend to be between 50 and 55. For men, it's between 60 and 65. As a result, reductions in income taxes have benefited primarily Israelis who are 50 or older, who are also more likely to own a home, more likely to be employed and benefit from more generous National Insurance Institute stipends.

In all, young people in Israel have become more hard-pressed financially. Fewer people under 35 are on the top half of the income scale than a decade ago. Meanwhile, the proportion of those between 35 and 54 at the bottom of the income scale markedly increased.

However, the proportion of people over 55 among the poor has shrunk substantially, while their proportion among the high earners has grown. It is also worth noting that, in contrast to the state benefits for younger Israelis, old-age benefits have become significantly more generous.