Workers born in the late 1990s and early 2000s are experiencing an unexpected wage boost, defying predictions that they would fare worse than previous generations. According to new research from the Resolution Foundation, employees in their mid-twenties from this cohort are earning more than millennials did at the same age and, remarkably, more than any generation since the 1950s.
Pay Rise for Gen Z at Age 24
The think tank's study found that real weekly pay at age 24 for those born in the late 1990s was 12% higher than for those born in the late 1980s. Moreover, individuals born in the early 2000s are earning more at 24 than any equivalent age group in over 70 years. This provides a glimmer of positivity for younger workers after prolonged anxiety over high property prices, sluggish economic growth, and increased taxation.
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. By age 25, Gen Z workers were earning more than anyone born since the 1950s were at that age."
Millennials vs. Gen Z: Economic Context
Millennials, typically defined as those born from the early 1980s to mid-1990s, became the first generation in modern history to fail to achieve higher disposable earnings than their parents. Their careers began during the 2008 financial crisis and the subsequent period of wage stagnation. In contrast, Gen Z has benefited from a moderate wage recovery after the economic damage of the 2008 crash, which derailed many millennial careers.
Threats to the Pay Rebound
However, the Resolution Foundation cautioned that this upturn might be temporary. Elevated energy prices and diminished economic growth linked to Middle Eastern tensions threaten to spark another household income crunch. Real wage increases in the private sector have already been declining since last autumn.
There is also growing concern about the number of young people not in employment, education, or training (NEETs). The foundation reported that the figure for 16 to 24-year-olds in this category surpassed one million earlier this year, highlighting obstacles for a substantial portion of Britain's youth.
McCurdy added: "But this good news story for Gen Z is already threatened. 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."
