Dissecting the big themes in markets and the economy
It is not all bad for today’s youngsters
Callum Williams
Senior economics writer
In many ways Generation Z—people born between 1997 and 2012—have had a tough time. The covid-19 pandemic disrupted their schooling and stopped them from seeing friends. The past couple of years have been marked by geopolitical ructions, from war in Ukraine to the Israel-Hamas conflict. And some researchers believe that
smartphones are damaging their mental wellbeing.
So far, so bad. But as
we report this week,
there is another side to the story.
Gen Z is rich.
Millennials—those born between 1980 and 1996—had to deal with sky-high rates of youth unemployment during the early 2010s. Gen Z-ers, by contrast, look for work during a global labour shortage. Youth unemployment is at its lowest in decades. Gen-Z job-hunters are able to demand much higher wages.
Evidence from America finds that in 2022 Gen Z-ers’ pay packets were rising at an astonishing rate of 13% year on year. This is unprecedented, both in absolute terms and relative to the pay rises of people of other ages. Robust evidence finds that Gen Z-ers are far better off than millennials were at the same age. We find similar evidence elsewhere in the rich world.
The obvious counterargument relates to housing and education. Aren’t these pricier than ever? On education,
possibly not.
Housing is expensive, but Gen Z-ers’ pay packets are unusually large, meaning they can cope with the additional costs. Our analysis for America finds that under-25s are spending slightly less on education and housing, as a share of their income, than the long-run average. Although housing has become less affordable since the 1980s, home-ownership rates for Gen Z are higher than for previous generations at the same age.
Gen Z-ers’ economic advantages
may not last for ever.
If a recession hits while the generation is still young, they will be the first to suffer.
Artificial intelligence
is potentially a big threat to livelihoods. But for now, things are looking good.
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→ We calculate that American under-25s spend 43% of their post-tax income on housing and education, slightly less than the long-run average.
The law of supply and demand is one of the first things that students of economics learn. When the price of something goes up, producers bring more to market. What, then, is going on in global stockmarkets?
