Gen Z Defies Expectations with Financial Success

Generation Z (Gen Z), born between 1997 and 2012 and now making up a significant portion of the global workforce, are surprisingly financially wealthier than previous generations at the same age.

According to findings by Kevin Corinth of the American Enterprise Institute and Jeff Larrimore of the US Federal Reserve, as cited by The Economist, Millennials (born 1981-1996) were somewhat better off than Generation X (born 1965-1980) at the same age. However, Gen Z is significantly better off than Millennials were at the same age. Specifically, the average 25-year-old Gen Zer has an annual household income of over US$40,000, more than 50% higher than the average Baby Boomer (born 1945-1964).

Current global wage trends reflect this upward financial trajectory for young people. In the United States, hourly pay growth among 15- to 24-year-olds recently hit 13% year-on-year, compared to 6% for workers aged 25 to 54, marking the highest “young person premium” since reliable data collection began. Similarly, in Britain, people aged 18 to 21 saw their average hourly pay rise by an astonishing 15% in 2023, far outstripping pay increases among other age groups. In New Zealand, the average hourly pay for people aged 20 to 24 increased by 10%, compared to an average increase of 6% across all age groups.

In 2022, Americans under 25 spent 43% of their post-tax income on housing and education, including college debt interest. This is slightly below the average for under-25s from 1989 to 2019. Furthermore, homeownership rates among Gen Z are higher than they were for Millennials at the same age, and Gen Zers save more of their post-tax income compared to young people in the 1980s and 1990s, indicating they are better off overall.

Many Millennials began their careers during the financial crisis of the late 2000s, struggling to secure high-paying jobs, leading them to be more deferential to their superiors and eager to please. In contrast, Gen Z views employment as a right rather than a privilege.

While global data is positive, surveys in the Philippines suggest that many Gen Zers do not feel financially secure. However, anecdotal evidence, such as the substantial Gen Z attendance at Taylor Swift concerts, indicates that some young people have significant disposable income.

In summary, despite the challenges and stereotypes, Gen Z is achieving notable financial success, often surpassing previous generations at the same age, with rising wages and better financial management.

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