Telling Gen Z, who are notoriously struggling financially, that they are rich is not much different than shouting into the eye of a hurricane that it’s good picnic weather. In other words, it’s not necessarily the reality for many young people who are struggling to stay afloat after years of high inflation, a difficult job market and an ever-looming recession.
On paper, the youngest working generation is doing relatively better than one might think. But even if some lucky Gen Zers remain on the sidelines, or the cohort on average earns relatively more than other generations of the same age, this does not fit the overall picture of financial insecurity. Overall, it’s a lot like one of those optical illusion books from the zoomers’ childhood: step back and the picture of a generation’s economic power changes, blink again (or dive deeper into the data) and watch it change.
You don’t have to look far to see stories of Gen Zers taking second jobs to survive, much less accumulate wealth. Trying to avoid instability during layoffs, many still do not have enough income to have additional purchasing power. Major milestones such as having a baby, buying a home, and retirement everything is becoming more expensive, Generation Z has begun to lose faith in their ability to succeed. That’s why 74% of millennials and 65% of Gen Z report that as of 2023, they are “beginning to fall further behind financially” than previous generations of the same age. USA today Harris Poll poll.
So why is the relatively wealthy generation experiencing such difficulties? Between inflation, student debt, the pandemic and a rocky housing market, Gen Z’s money doesn’t seem to stretch as far as it used to.
One way to see the relative uncertainty of Generation Z is to look at their wage growth. Economist notes that Generation Z is experiencing the highest “younger premium” in terms of hourly wage growth since data collection began in 1998. older employees from 25 to 54 years old.
Of course, because they are earlier in their careers and typically earn less than their older counterparts, Gen Z has more opportunities for growth. And they are likely beneficiaries of the Great Resignation, using their relative leverage to leave their overworked and underpaid jobs in the restaurant and service industries to fight for decent wages. “Rather than being trapped in jobs with low pay or unstable schedules, these workers sought roles that better aligned with their personal and professional goals,” write researchers and professors Daniel Schneider and Kristen Harknett at the Harvard Kennedy School. report for young workers in the service sector.
Separate data from Pew Research Center adds to the narrative that Generation Z is in relatively better shape than other young people from different eras. The average salary (adjusted for inflation) for people ages 18 to 24 in 1993 was just over $15,000. In 2023, zoomers earned about $20,000. Older Gen Zers are also doing better, earning nearly $10,000 more than younger generations did three decades ago. Despite this, young people’s money doesn’t go as far as it once could. Inflation remains relatively steady as food and everyday expenses continue to take up a large portion of household wages. Faced with a high cost of living and saddled with disproportionate debt from student loans, Gen Z faces many obstacles when it comes to building wealth.
AND paper Kevin Corinth of the American Enterprise Institute and Jeff Larrimore of the Federal Reserve Board concluded that each younger generation may not be as doomed as we see it. They found that millennials were doing relatively better than Gen Xers at the same age. Economist goes even further, citing federal data that explains that the average 25-year-old earns more than 50% more than baby boomers the same age, with an annual household income of more than $40,000. Having taken control of the housing market, boomers now account for more than half wealth of the nation.
A major source of wealth accumulation is becoming increasingly out of reach for today’s youth as Millennials and Generation Z struggle to afford a home. Many were forced to live at home save up and even start renting an apartment. More than three-quarters of millennials and Gen Zers report being somewhat dependent on their parents for money, according to a recent Experian 2023 study. survey.
Bye Boomers appear to have control of the housing market, many Gen Zers are ‘outperforming younger adults of yesteryear’, according to analysis Redfin. While homeownership stagnated last year, Gen Zers were able to reach pandemic-era all-time lows a couple of years ago, according to the real estate company. And, of course, there is a larger story of intergenerational inequality. Some ultra-wealthy members of Generation Z may be skewing the average financial statistics of Generation Z. Many younger people who may be trying their hand at the current housing market are relying on help from older generations with a down payment.
“As housing costs have soared, many young people with family money are getting help from mom and dad, even if they have a job and a decent income,” Redfin chief economist Daryl Fairweather once said. said.
So yes, Generation Z is relatively wealthy compared to their parents and grandparents. But the nation is almost saying, “Your money is no good here” to young people who are still forced to depend on older generations to survive.