The Resolution Foundation has found that Generation Z—those typically born between 1997 and 2012—are earning more than millennials did at the same age, marking a reversal of a long-term trend of stagnant living standards.
Millennials First Generation to Miss Out on Higher Disposable Incomes
According to the think tank, millennials—born between the early 1980s and mid-1990s—are the first generation not to have enjoyed higher disposable incomes than previous generations. However, real weekly pay at age 24 for those born in the late 1990s was 12% higher than for cohorts born in the late 1980s. The study also found that those born in the early 2000s are earning more at age 24 than any other generation going back to those born in the 1950s.
Mini Pay Rebound for Gen Z
Charlie McCurdy, senior economist at the Resolution Foundation, said: “The living standards stagnation of the millennial generation has been well documented over the past decade. Many have speculated that the breakdown of generational progress has continued for gen Z too. But with the oldest members of gen Z now several years into their working lives, the good news is that they’ve enjoyed a mini pay rebound.”
Threats to the Pay Rebound
However, the think tank warned that the improvement could prove short-lived. Higher energy costs and weaker economic growth linked to conflict in the Middle East risk triggering another squeeze on household finances. Real wage growth in the private sector has already weakened since last autumn.
NEETs Crisis a Growing Concern
There is also mounting concern over the number of young people not in employment, education or training (NEETs). Mr McCurdy cautioned: “But this good news story for Gen Z is already threat. For a start, the higher prices and weaker economic growth resulting from war in the Middle East are threatening a fresh squeeze on pay packets. Even more worryingly, a million 16-24 year olds are currently not in employment, education or training. Getting to grips with Britain's NEETs crisis is crucial for getting the careers of more Gen Z workers off the ground, and ensuring that they too can outperform their millennial predecessors when it comes to wages and wider living standards.”
