Alan Milburn said young people have been the victims of the recession and has demanded “urgent action” to prevent this generation being worse off than the previous one.
The former Labour MP, speaking to the Observer newspaper ahead of the publication of his report on social mobility, said the issues preventing young people making progress need to be tackled now to prevent problems for society in the future.
He told the paper: “It is depressing. The current generation of young people are educated better and for longer than any previous one. But young people are losing out on jobs, earnings and housing.
“Urgent action is needed to prevent this generation of young people faring worse than their parents’ generation.
“Social mobility relies on young people having better opportunities to progress. Investment in the skills and employment of young people today is money saved in social security and the costs of poverty tomorrow.”
He said the ratio of youth to adult unemployment rates is now just under three to one, compared to just over two to one 18 years ago.
Mr Milburn added that around half a million young people - five times the capacity of Wembley stadium - are expected to be out of work by the time of the next election.
The former Health Secretary chairs the Social Mobility and Child Poverty Commission, which monitors the progress of the Government and other organisations in improving social mobility and reducing child poverty in the UK.
Speaking at the Yorkshire Social Mobility Summit in 2012, Mr Milburn warned that the link between hard work and reward was broken in Britain, the least socially mobile country in the Western world.