Gen Z, the generation born between the late 1990s and early 2010s, is entering the workforce during one of the strongest job markets in US history. Compared to Millennials who entered the workforce during the Great Recession, Gen Z is experiencing a much more favorable job market. Wages for younger workers have increased faster than inflation, and the unemployment rate for 16-24 year-olds last year was the lowest since 1953. Despite these positive aspects, Gen Z is facing challenges, particularly in dealing with inflation and high costs of living.
Inflation has pushed prices rapidly higher over the past few years, making essentials like food and shelter particularly expensive. The cost of housing is a huge challenge for younger workers, with the least progress being made in bringing down inflation in this sector. Homeownership is a key factor in surviving inflation, as homeowners can take out equity loans or benefit from selling their property. However, Gen Z has had limited opportunities to enter the housing market, putting them at a disadvantage compared to older generations.
In addition to financial challenges, Gen Z is grappling with high rates of anxiety, depression, and distress. A 2022 McKinsey study found that Gen Zers report higher rates of mental health issues than any other age group. Many Gen Zers are unable to afford behavioral healthcare and often turn to social platforms like TikTok and Reddit for advice. The disruptions caused by the global pandemic during their formative school years have further added to their struggles, leaving them feeling uncertain about their future prospects.
Some members of Gen Z are expressing their financial frustrations on social platforms like TikTok, where they share their struggles with the cost of living and the challenges of surviving in the current economy. The rising inflation expectations among Gen Z could have a scarring effect and make it difficult to combat inflation. This growing sense of fatalism among younger generations is a concerning trend that could have long-term effects on their financial well-being and outlook on the future.
While Millennials have also faced their fair share of challenges, particularly with regards to debt and the perception of the American Dream being out of reach, there are signs of progress. Millennials have seen an increase in retirement savings and wage growth in recent years, outpacing Gen X in these areas. The current strong labor market has resulted in fewer young people taking on graduate school debt, which has been a significant burden for many Millennials. Despite these positive trends, both Millennials and Gen Z are facing unique challenges in the current economic landscape.
