Gen Z's Rise: A Generation Earning More, But Facing Uncertain Future
The latest research from the Resolution Foundation reveals a fascinating shift in the earnings landscape, with Gen Zers surpassing their millennial counterparts in terms of early-career earnings. This development, however, comes with a complex narrative, highlighting both the triumphs and challenges of this generation.
A Pay Rebound for Gen Z
Born between 1997 and 2012, Gen Z is witnessing a mini-rebound in pay packets, a stark contrast to the struggles of millennials. The study indicates that real weekly pay at age 24 for those born in the late 1990s is 12% higher than for their millennial counterparts born in the late 1980s. This trend extends further, as those born in the early 2000s are earning more at age 24 than any other generation since the 1950s.
Charlie McCurdy, a senior economist at the Resolution Foundation, notes the living standards stagnation of millennials and the speculation surrounding Gen Z's progress. However, he emphasizes the positive turn, stating that the oldest Gen Z members are enjoying a pay rebound.
Minimum Wage Impact
The report highlights a significant factor in this pay rebound: the escalation of the minimum wage, particularly since 2016. The lowest-paid workers, those in the bottom 10% of earners, have experienced a remarkable 36% real-term pay increase between 2012 and 2025. This trend is more pronounced among younger workers, with those aged 22-29 on median earnings seeing a 15% hourly pay growth, compared to 4% for those in their 30s and 11% for all employees.
A Threat Looms
Despite these positive indicators, the study warns of an impending threat. Real wages may soon face a downturn due to various economic pressures, including higher prices and weaker economic growth resulting from the Middle East conflict. This could potentially undermine the 'good news story' for Gen Z.
The Neet Crisis
The article also delves into the Neet crisis, where the number of 16- to 24-year-olds not in employment, education, or training has reached approximately 1 million. Alan Milburn, a former Labour minister, warns of a potential 25% rise in Neets to 1.25 million by the early 2030s, emphasizing the urgent need for government action to prevent a 'lost generation' among Gen Z.
Conclusion: A Complex Journey
Gen Z's journey into the workforce is a complex narrative, marked by both financial triumphs and looming challenges. While early-career earnings show promise, the Neet crisis and economic uncertainties cast a shadow over the future. This generation's success in navigating these complexities will be a defining factor in their overall well-being and the country's economic trajectory.
In my opinion, this research highlights the importance of understanding generational dynamics and the impact of economic policies on different age groups. It also underscores the need for comprehensive strategies to address the Neet crisis and ensure a brighter future for Gen Z.
