Transcription
Good news! The average Gen Zer in the workforce now has a net worth of $22,000—wait, no, that’s a mistake. Negative $22,000. So… what’s the actual good news? By the time they hit 27, the average Gen Zer will finally have a positive net worth… of $8,142. Hey, progress is progress.
But how did Gen Z get this way? Is it really all that avocado toast spending? Or was that millennials? Today on The Infographics Show, we dive deep into the depressing story of why Gen Z is the poorest generation ever.
It’s no surprise that Gen Z is struggling, and a big part of the problem comes down to money. Take Maddie, a 25-year-old working at a senior living home in Pennsylvania. She puts it bluntly: “Everyone’s going to be in debt their whole life. I don’t want to be, but I have this feeling that no matter what I do, no matter how hard I work, there’s always going to be some kind of debt that I have.” It’s a legitimate concern. But, why don’t they just try working for a change?! Pull themselves up by those good ol’ bootstraps? Apparently, they do work… it just doesn’t seem to help much. One Gen Z Reddit user shared this fond memory about their first full-time job: “my first full-time job was at Deloitte and they paid me $36,000 in 2019. I went into credit card debt to pay for the train to work.”
A full 59% of Gen Z reported feelings of stress and anxiety about their finances, the highest of any generation. While Gen Z is generally stress and anxiety prone, it turns out they have some very real reasons to be concerned. Wages are bad, debts are up… why is all this happening? Let’s see what the data tells us.
As of 2023, 10.5 million teens and adults aged 13-27, or 16% of Gen Z, live in poverty, the highest of any generation except Alpha. Things are so bad that Bank of America recently discovered 46% of Gen Z adults need financial assistance from their family to stay afloat. And it’s not because they’re lazy. Most of them are working full time, and a significant chunk of them are working more than one job. In fact, 53% of Gen Z have a side hustle on top of their full-time job just to make ends meet. That could mean driving for Uber—which, by the way, 24% of adult Gen Zers do—or selling handmade stuff online. And then there are the online services we’d rather… not get into. Gotta do what you gotta do, right? Many young adults who don’t already have a side hustle are planning to get one just to survive their 20s. In fact, 51% of Gen Z plans to monetize a hobby—because nothing makes your favorite pastime more enjoyable than needing it to afford groceries.
Despite that, the same Bank of America survey found that 60% of Gen Z adults don’t have enough savings to cover three months of expenses; so if they get fired or have an emergency, many turn to credit cards. The New York Fed found that one in seven Gen Z adults have already maxed out their credit cards. And that’s not just a short-term problem—it wrecks their credit history, making it harder to get loans, rent apartments, or even qualify for better financial opportunities. Oh, and saving for the future? Yeah, that’s not happening.
We’ll get into why Gen Z is racking up debt soon—and despite what Instagram might have you believe, it’s not because of champagne brunches and Santorini photo shoots. The real issue is that credit card companies themselves have changed, and not in a way that helps. In fact, many of those changes have put Gen Z at a serious disadvantage.
According to WalletHub, the average credit card interest rate reached an all-time peak in August of 2024, maxing out at 21.76%. In comparison, just ten years earlier, millennials trying to pay off credit card debt only had to deal with an average interest rate of 11.82%. Higher interest rates mean that any unpaid credit card balances rack interest up much faster than they normally would. It makes the goal of eventually paying credit cards off harder and harder. Bankrate credit card analyst Ted Rossman says, “to be just starting out and already falling behind the eight ball can be a tough cycle to break.”
And it’s not like Gen Z is just mindlessly splurging on their credit cards. Despite all the criticism they get in the media, only 5.5% of Gen Z’s average spending is on dining out, compared to 5% for other ages—keeping in mind that Gen Z also spends much less than other ages overall. But Moody’s Analytics found that the young adult generation is spending much more of their income on necessities compared to other generations, mostly on rent.
According to a 2022 American Community Survey by Zillow—a site that may as well sell unicorns for how realistically Gen Z can actually buy a home—three in five renters aged 18 to 25 spend more than 30% of their income on housing. And in 21 of the largest U.S. cities, that number is even higher.
That being said, some of Gen Z’s spending is definitely impulse buys. Gen Z tends to scroll TikTok and Instagram like crazy—platforms where half the creators are trying to sell something. 44% of Gen Z takes influencer recommendations into accounts when purchasing products. This can result in a lot of regret over overpriced skincare, and supplements that either have testosterone boosting abilities or ground up flour in them—there would be no way to know. Not to mention, after the world shut down in 2020—something else that influenced Gen Z’s prospects in crazy ways, as you’ll soon see—a lot of people wanted to blow off steam and go out and live after being locked down for months. And living requires paying.
How can Gen Z even start paying off so much credit card debt? One option is to go back to their childhood bedrooms… that a lot of Gen Z never left in the first place. In terms of staying with their parents, Gen Z outperforms even the youth of the Great Depression—a contest no one has ever wanted to win! In July 2020, the Pew Research Center discovered that 52% of young adults lived with at least one of their parents. This set a new record, as the previous highest share was only 48%...recorded in 1940.
Now you might be thinking—“hey wait a minute! July 2020 was right after a pandemic hit, that can’t be the general state of things.” And you’re right! Because in February of 2020, just as COVID was starting its world tour, the number of young adults living with their parents was only 47%. Hovering just a percentage point below the tail end of the Great Depression is never a good sign. And with 56% of Gen Z saying they live paycheck to paycheck, rent isn’t just expensive—it’s a dead end. How are they supposed to save money or pay off student loans when the jobs they got because of those loans barely cover the bills?
But Gen Z is working so what gives? The answer is, the insanely high cost of living, and the refusal of wages to match it. In 2022, Gen Z was paying 31% more for housing than Millennials were just a decade before them—adjusted for inflation. And Millennials were already getting a bad deal. Gen Z and Millennials pay, on average, almost 100% more for their homes than baby boomers in the 1970s. In 1975, the average home in the U.S. cost $42,600, or $244,700 when adjusted with 2024 inflation rates. In 2024 however, the average home costs just over $512,000. And if you’re looking in major metro areas, where top universities and booming job markets are supposed to offer better opportunities, the prices are even worse.
That’s not the only cost of living to shoot up over the decades either. From 2012 to 2022, car insurance payments more than doubled, even accounting for inflation, and health insurance spending went up 46%. While wages also went up, they only increased by an inflation-adjusted 26%. That doesn’t even cover the higher housing prices, nevermind everything else. And that’s just comparing Gen Z to Millennials—things get even worse when you stack them up against baby boomers.
Back when boomers were in their 20s, they had 86% more purchasing power than Gen Z does today. Imagine walking into a boomer’s house at 25—yes, an actual house at 25, it’s not a myth—and tossing out 17 of every 20 things they owned. What’s left is the equivalent of what Gen Z can buy today compared to boomers at the same age. Not to mention, boomers weren’t drowning in as much debt. When it comes to credit cards, Gen Z unfortunately owes the most. TransUnion found that the average Gen Zer’s debt totaled around 16% of their income at the end of 2023. Millennial debt, which totaled 12% of their income ten years before that. Gen Z is also much more likely to fall behind on credit card and car payments because they can’t afford them.
But the biggest expense for most of Gen Z, by far, is college. The average Gen Zer owes $20,900 in student loans. That’s a 14% increase on what Millennials owed at the same age, and more of them owe it. 36% of young adults aged 20 to 25 have student loan debt, which is 5 percentage points higher than millennials when they were that age. It may be easy for older generations to say “so don’t go to college”, but the job market has drastically changed since the days of, “why don’t you walk into that office with a resume and a firm handshake and ask if they’re hiring?” Now, the labor market is much more competitive, harder to get into in the first place, and the percentage of jobs that require a college degree has shot up.
Back in 1973, when a lot of boomers were just starting out in the job market, only 28% of jobs required any kind of higher education—whether that was an Associate’s, Bachelor’s, or beyond. Fast forward to 2018, and that number had jumped to 63%. If college feels like a necessity for the workforce now, it’s only going to get worse in the future. The same report projected that by 2031, 72% of jobs will require some form of higher education, with 42% needing at least a bachelor’s degree just to be considered. So “forget about college then!” is not really an option for most of Gen Z, because the costs keep getting higher. Specifically, since the 1970s, the cost of private school tuition and fees have gone up by 2,107%, and the cost of even public school tuition has gone up by 2,580%. Well… surely inflation will make that number sound slightly less terrible, right? Right?! Unfortunately not because… those numbers have already been adjusted for inflation.
For private school, the average boomer student in 1970 paid $1,600 for one year of tuition, which translates to $12,000 adjusted for 2022 inflation. In 2022, that same tuition cost $41,600. And of course, “prestigious” private universities generally run much higher than that. For public university, a 1970s student paid $400 for one year of tuition—searching the pockets of our jeans and underneath our couch cushions should cover half of that. That translates to $2,800 adjusted for 2022 inflation. In 2022, an average student paid $11,400 for a year of public university instead.
Back in 1970, the median income was $9,870 per year—about $190 per week. That meant a summer job alone could cover the $400 needed for a full year at a public university. Even the $1,600 tuition for a private school was within reach with a part-time job during the year. Now? Good luck covering a single textbook with summer job money.
But there is a tiny silver lining to the college debt problem: some sources found that, despite their student loans, Gen Z’s overall debt isn’t as large as that of the older generations. The bad news is, that’s because older generations are paying off mortgages on homes that Gen Z can’t even afford to look at.
Well, for Gen Z to be going into all this debt for college, they’re hopefully getting a steady, great paying job out of it. As you might have guessed given the tone of this video… no, they’re not. The U.S. job market has had historically low unemployment for years now, but Gen Z isn’t exactly winning in that equation. On paper, going to college seems like a smart move—college grads have a 2.2% unemployment rate, compared to 4.5% for those who didn’t attend. But recent grads are actually doing worse than both groups, with 5.3% unemployment.
A number of factors contribute to this, including more volatile industries, shifting job markets, and the fact that when mass layoffs hit, younger, less-experienced workers are usually the first to go. Spencer Kammerman, a University of California at Irvine computer science and engineering graduate, gives one example of this. At 25 years old, he has already been hired—and fired—from two tech companies. Tech is an industry known for frequent mass layoffs, and unfortunately, it’s also one that needs a lot of young college-educated adults. Since the last time he was fired, Kammerman has been job hunting for eight months, applying to hundreds of positions. He’s gone through lengthy interview processes since then with multiple companies. But he hasn’t found a new job yet, thanks in part to massive competition for just a few spots. According to LinkedIn, the use of AI for cover letters and resumes has also seriously increased the number of applications per job opening, as the applications become easier to do. Eventually, Kammerman ended up where most of Gen Z does—back home with his parents. As he puts it, “it feels like the odds are stacked against us. It’s been difficult to get off the ground. But I’m not giving up.”
Despite his hope, major companies like McKinsey aren’t projecting much of a rosy future for Gen Z and jobs. The McKinsey Global Institute said that by 2030, almost 375 million workers will have to find new jobs, or new industries altogether, due to AI automation. Critics point out that, like anything McKinsey says, this projection should be taken with a massive grain of salt. It relies on a lot of assumptions about how quickly AI will develop and be widely adopted. But even without technology threatening to replace them, Gen Z is still having trouble finding the kinds of jobs high schoolers used to get for pocket change. For example, the decline of brick and mortar stores and the rise of e-commerce means the once-reliable world of retail work is increasingly unsteady. And the lack of job security once Gen Z gets in the workforce doesn’t make it easy to make a steady income, let alone plan out savings and retirement accounts.
That’s partly because of the rise of the gig economy, which has converted a lot of salaried positions to contract positions. 36% of US workers are in the gig economy, which is growing three times faster than the regular workforce. It’s not just Uber drivers and Postmates delivery either; at 40% of companies, one in four workers is now part of the gig economy instead of in a full-time, salaried position. Though there are some benefits to gig work depending on what it is—setting your own hours, for example—it’s not very stable. It doesn’t come with benefits. And most gig work isn’t well paid either.
In addition, for better-paid full-time jobs, many bosses and hiring managers have a dim view of Gen Z employees, and would rather not hire them in the first place. Researchers asked employers what they’d prefer to do when they have a job vacancy, ranking a series of actions; among them, hiring a Gen Z employee. They found that some employers will go to extreme lengths to avoid hiring Gen Z. 45% said they’d rather hire a freelancer or get a retired employee back. 37% said they’d rather make AI do the job, and 30% would rather leave the position unfilled.
So what financial approach is Gen Z using to build their future? For some, the answer is giving up on the future entirely. 23-year-old Sophie expressed her thoughts on the economic cards stacked against her and her generation: “we’ve got climate change, war—it’s like, are we even going to be here to retire? I don’t necessarily feel worried. It’s more like helplessness.”
COVID definitely didn’t help in that regard. In 2020, when the pandemic hit, older Gen Z kids were just entering college or the workforce. At a time when they should have been networking, honing their social skills, and getting some hands-on experience, they were sent home and had to wait out some of their most formative years. Young people found themselves in the midst of a job crisis as industries either told workers to go remote or laid them off. Some started jobs where they never even got to meet their bosses or teams to get some good mentorship and networking opportunities. And college students didn’t make vital in-person connections that could help them enter the job market with recommendations after graduation.
Beyond all these factors, there is one more reason Gen Z is the poorest generation, one that doesn’t get discussed that often. Because… they were born that way. Let us explain; economic inequality has been increasing for decades in the United States, as is obvious when looking at young peoples’ financial status today. The Federal Reserve says that the average net worth for people under 35 is $76,300. If that sounds impressive and wrong to you, that’s because it’s way off base for most young adults. The median young adult has a net worth of only $13,900. The average is just thrown off because of a small percentage of young adults who are either very high earning, or very high inheriting.
But what about the Gen Zers who inherit nothing? Because in the U.S., incomes and birth rates are correlated. And generally, people below poverty level tend to have more kids than people above the poverty level. In 2005, in the middle of Gen Z being born, those with an income below poverty level had a birth rate of 95, while those with an income at 200% of poverty level or more had a birthrate of 45. Which means there are disproportionately more kids being born into poverty, compared to the general population. And in the U.S., with lower rates of social mobility and fewer public safety nets compared to other developed economies, being born into poverty often means it’s really hard to leave it. Gen Z kids born into poverty start at a serious disadvantage. They often get a lower-quality education and have fewer opportunities for higher education, making it even harder to break out of the cycle. On top of that, they can’t rely on parental financial help or stay at home rent-free for long—something a lot of Gen Z needs just to get by. So Gen Z kids brought up in poverty often become poor Gen Z young adults.
Despite this, there are a few encouraging signs. The Atlanta Fed found that wages for 16 to 24 year olds rose 8.6% in 2024, compared to 5.2% of the general population. So, perhaps companies are finally realizing they need to pay their young workers a respectable wage. Student loan forgiveness helped a lot of people claw their way out of debt and be able to start saving; an expanded program could set young adults up for a better financial future. Stronger laws protecting employees from random firings and guaranteeing benefits for gig workers could also provide some stability for Gen Z adults. But these programs are unlikely to happen soon, and the long-term view doesn’t look great, especially with poverty rates for Gen Alpha equal to those of Gen Z—16%.
Is Gen Z truly the poorest generation, or is this just the usual ‘back in my day’ argument from older generations? Let us know what you think in the comments! Now go check out Why Gen Z Is Having Less Sex Than Other Generations or click on this video instead.