Young people today are doing better than ever when it comes to employment and wages, so why don’t they feel like it? And why are they still relying on the Bank of Mom and Dad? That’s the question posed by a new study from Pew Research Center, with the puzzle of Gen Z being better off and still somehow struggling.
The data shows that Gen Z is doing much better than young people in the 1990s when it comes to wages, and as Gen X was largely responsible for parenting Gen Z, that means that many children are outperforming their parents. In 2023, the median pay of a person between the ages of 18 and 24, for instance, was about $20,000, compared to $15,462 in 1993, when adjusting for inflation. And those between the ages of 25 to 29 make nearly $10,000 more than the young adults of 30 years ago.
As more women enter the workforce, employment numbers for young people in the U.S. have also increased. About 70% of adults in the 25-to-29-year-old category had a full-time job in 2023, compared to 65% three decades ago, according to Pew.
Gen Z may seem like they are doing great on paper, with better pay thanks to higher levels of education and a propensity to job-hop, but still say they are struggling to keep up, while Gen Z has well-publicized mental health issues, at the same time as they are mainstreaming discourse around the importance of mental health, especially in the workplace. The Pew data suggest that there’s a simple economic aspect to this: While wages are higher, many young people are hindered by higher costs that did not affect previous generations as drastically—and it’s directly affecting when they attain certain life milestones. Simply put, it’s depressing for Gen Z not to be able to afford the trappings of normal life as their parents did.
In debt for longer, getting married later
Just under half of adults in their mid-to-late twenties had outstanding student loans in 2023 compared to just under a third in 1993. The median amount owed has also jumped from four digits to five as the cost of college has become increasingly unaffordable for some. Still, college enrollment rose last year for the first time in a decade.
Over the past couple of years, the Fed’s interest rate hikes have helped put Gen Z on the real estate sidelines, but so have rising prices. And those young adults who do buy a home are straddled with higher mortgage debt than previous generations—although a recent Redfin study has pointed out that Gen Z is working hard to counter this, with a surprisingly high homeownership rate compared to previous generations, even baby boomers.
Adjusted for inflation, an 18-to 24-year-old in 2022 had a median mortgage debt of $117,000, compared to $39,367 for those in the same category in 1992, according to Pew. The same trend applies to those between the ages of 25 and 29, who had a median adjusted mortgage debt about $60,000 higher than their counterparts in the 1990s.
Consequently, many young adults have delayed major life events that used to define adulthood, such as moving out of a parents home and getting married. The study revealed that 57% of adults in the 18 to 24 range lived with parents, compared to 53% in 1993. The pattern holds true for slightly older adults in their 20s as well.
The median age for getting married and having kids has also increased, in line with the trend from other developed nations. While in 1993 half of adults in their mid-to-late twenties were married, less than a third were as of last year, and even fewer had kids.
If you are a young person who feels weighed down by increased costs for housing and education and has struggled to get ahead, Fortune wants to hear your story. Contact marco.quiroz-gutierrez@fortune.com and tell us more.
Subscribe to the CEO Daily newsletter to get the CEO perspective on the biggest headlines in business. Sign up for free.
FAQs
Zoomers, however, are much better off than millennials were at the same age. The typical 25-year-old Gen Z-er has an annual household income of over $40,000, more than 50% above baby-boomers at the same age. Gen Z's economic power was on display at a recent concert by Ms Rodrigo in New York.
How is Gen Z doing financially? ›
Many Gen Zers are focused on staying afloat, making traditional financial milestones feel irrelevant. Over half (56%) of Gen Zers said they don't have enough savings to cover three months of expenses, per an August 2023 Bank of America survey.
Why are Gen Z in debt? ›
The rising debt load largely reflects a surge in prices for food and shelter at the start of their careers, coupled with a larger percentage of Gen Z who graduated with student loans.
Which generation are the parents of Gen Z? ›
Generation Z has been primarily raised by Generation X. But not me. My parents were born toward the end of the baby boomer years and had me, a Gen Zer, when they were both 43. It wasn't until I was older that I truly understood the age difference between my parents and those of my classmates.
Why are Gen Z so rich? ›
American Gen Zers, the oldest now entering their late 20s, have already accumulated substantial wealth through inheritance, investments, and entrepreneurship. Cerulli Associates estimates a seismic USD 84 trillion will transfer from baby boomer wealth in the USA to heirs, with Gen Z front and center.
Are Gen Z motivated by money? ›
Through a compilation of Gen Z interviews and studies from Bain & Co, CFA Institute, EY, and others, the article concludes that the youngest generation in the workforce is motivated by competitive compensation and quick career growth, and is quick to move on to other opportunities if they don't get that.
Is Gen Z generous? ›
Key Findings: Gen Zers are generous, especially with their time and energy. 84% of Gen Zers report that they support nonprofit organizations, charities, or causes in some way.
What does Gen Z spend the most money on? ›
46% of Gen Z spent more on fashion than anything else in 2022 (5WPR) Gen Z was the only generation to have clothing and fashion as their top spending category. 30% of Gen Z spent more on beauty and personal care than anything else, far more than any other generation.
What disadvantages does Gen Z have? ›
Cons:
- Over-reliance on technology: Gen Z don't know life outside technology and they rely on technology to solve all the problems they have. ...
- Lack of real-life wisdom: Although they're confident and self-centered, they lack real-life wisdom to handle most of the challenges they come across.
From issues like discrimination and human rights to personal safety and violence, it's all stressful to younger Americans. But, like their older counterparts, health- and finance-related concerns topped the list of stressors.
According to data on 78.2 million Credit Karma members, members of Generation X (ages 43 to 58) carry the highest average total debt — $61,036.
Why is Gen Z giving up? ›
In addition to feeling the least engaged in work, Gen Z also finds their responsibilities uninspiring. Gen Z workers report having the least meaningful work (14%) and least autonomy at work (21%) compared to other generations, who are more fulfilled and have more autonomy.
Will Gen Z ever be able to afford a home? ›
Millennials Got Cheaper Mortgages Than Their Parents
“As Gen Z looks to buy their starter homes in the next few years, they will face both high rates and high prices. It may be years before the housing market is affordable again,” Allison explains.
Is Gen Z aging faster? ›
Don't Worry, Gen Z, Your Face Isn't Aging Faster Than Others.
Who is the first Gen Z baby? ›
While the dates are still a bit up in the air (some argue that the oldest Zoomers were born in 1995), the Pew Research Center defines members of Gen Z as anyone born between 1997 and 2012. That means the group spans ages 12 to 27 as of 2024.
What generation will be the wealthiest? ›
Millennials are set to inherit as much as $90 trillion in assets before 2044, a new report shows. Many millennials are currently grasping in frustration at long-held American Dreams like homeownership, a steady job and an affordable cost of living.
What generation will inherit the most money? ›
By Knight Frank's estimation, this shift will make affluent millennials “the richest generation in history.” Previous reports show this figure at a lower $84 trillion, but nonetheless confirm a shake-up in the foundations of spending power across the globe.
Are millennials going to be rich? ›
Millennials could stand to inherit trillions worth of property and property assets passed down by ancestors in the next 20 years. Millennials could potentially become the wealthiest generation ever, according to estate agent Knight Frank's 2024 Wealth Report.
Does Gen Z spend more than millennials? ›
Compared to Gen Z, millennials typically spend more money, which comes to no surprise, since they are older, more likely to be employed, and typically less reliant on their parents or guardians.
