Generation Z is more anxious and more prone to depression, but has had easier access to work and better wages
La Generation Z it is made up of approximately 250 million born people between the 1997 and the 2012. These people are doing very well in the world of work.
A good half are already employed and, in the United States, the number of Gen Zs employed full-time is about to surpass that of baby boomers (people born between 1945 and 1964), now in sight of retirement.
In the USA, there are already more than 6.000 managerial roles and 1.000 political positions covered by Gen Z. Its growing influence requires businesses, governments and finance to fully understand the characteristics and expectations of this new generation.
First of all it’s about understanding the differences that characterize the various generations. They are diversities born largely from the socio-economic context in which they grew up.
An example of this is people who reached adulthood during the 20s in Germany, a period marked by runaway inflation. This experience has determined the German population’s profound aversion to inflation.
Similarly, in America, those who lived through the Great Depression developed a distrust of investing in the stock market due to the trauma of experiencing a historic stock market crash.
The generation of anxiety
Generation Z, according to many observers, is generation from anxiety. The success of a film like “Inside Out 2”, in which the feeling of anxiety tends to take over, is partly a confirmation of this
Jonathan Haidt, a social psychologist at New York University, is also convinced of this, and his new book, The Anxious Generation, sparked a lively debate. In fact, some data seems to confirm this trend: today’s young men and women are less inclined to relate compared to previous generations, they tend to fall into depression.
Furthermore, they show a less propensity to drink, to have sexual intercourse or to engage in sentimental stories. According to official data, people between the ages of 15 and 24 spend on average only 38 minutes a day in personal socialization, compared to almost an hour in the 2000s. Haidt identifies the main cause of this phenomenon in smartphone And in the social media. However, Haidt’s ideas are not always shared.
The debate on Gen Z anxiety risks overshadowing another aspect that distinguishes this generation, i.e extraordinary financial success. This, in turn, is affecting the relationship with work.
Gen Z’s access to work
Let’s consider the generation that preceded Gen Z: the people born between 1981 and 1996 called Millennials Many of them entered the workforce during the global financial crisis of 2007-2009, a period that had a disproportionate impact on younger generations.
Between 2012 and 2014, over half of Spanish and Italian youth looking for work, he couldn’t find a job. The situation of youth unemployment in Greece it was even more dramatic.
La Gen Z who finishes his studies, today he finds himself facing very different circumstances. The rate of youth unemployment in developed countries, around 13%, it had not been this low since 1991.
Youth unemployment in Greece has fallen by half from its peak. Hotels in Kalamata, a popular Greek tourist destination, are complaining of labor shortages, a situation that was unthinkable just a few years ago.
A large part of Gen Z has chosen to study subjects that facilitate entry into the world of work. In Britain and America, the humanities are shunned to pour on economics and engineering.
Professional qualifications are also becoming increasingly valued. Gen Z therefore benefits from more accessible job markets.
Better wages for Gen Z
In America, hourly wage growth among people aged 16-24 has recently seen an increase of 13% per year compared to 6% among those aged 25-54. This is the highest “premium for the young generation” since reliable data has existed.
In Great Britain, where youth wages are measured differently, the average hourly pay of 18-21 year olds increased by an astonishing 15% in 2023, far outpacing wage increases for other age groups.
In New Zealand, the average hourly wage of 20-24 year olds increased by 10%, compared to a general average of 6%.
Strong wage growth is reflected in personal income. A new study by Kevin Corinth of the American Enterprise Institute and Jeff Larrimore of the Federal Reserve evaluates family income by generation, taking into account taxes, government transfers and inflation.
At the same age, the Millennial generation is slightly better off than Generation X – people born between 1965 and 1980. However, Gen Z outclasses Millennials at the same age.
A 25-year-old Gen Z can have an annual income of more than $40.000, more than 50% that of a Baby Boomer at the same age.
In summary, working Gen Zs benefit, as a whole, from very respectable salaries within the entire developed world.
In 2007, the average net income in France of the age group between 16 and 24 years was equal to 87% of the national average. Today, this percentage has risen to 92%.
In some countries, such as Croatia and Slovenia, the earnings of Gen Z people reach the national average.
Does this really happen?
Gen Z challenges the idea of higher incomes, arguing that this idea ignores the exponential increase in college and housing costs.
However, the data shows a different reality. Despite house prices globally are close to historic highs and people with a college degree have more debt than in the past, Gen Z is actually coping better thanks to higher wages.
In 2022, people under 25 in America invested 43% of their income on housing and education including interest on college debt. However, this is slightly lower than the average for the same age group between 1989 and 2019. Driven by these higher incomes, homeownership rates for Zoomers in the United States are higher than those for and Millennials at the same age (even if lower than those of previous generations).
Both generations in the United States are showing a change in mindset towards such a crucial aspect as buying a house. Renting is preferred to ownership. Here are the reasons.
- Increasing costs: High home prices and rising interest rates make homeownership less accessible than in the Boomers generation.
- Hidden costs: Owning a home comes with additional expenses beyond the mortgage, such as property taxes, insurance, maintenance and repairs.
- Competing investments: The market offers alternative investment options such as the stock market, which can potentially offer better returns than home ownership, especially in the short term.
- Lifestyle factors: Prioritize flexibility and mobility over being tied to a property. Renting allows them to easily relocate for work or travel opportunities.
- Gender differences: Women in particular are challenging traditional understandings of homeownership in the direction of being more financially cautious or prioritizing career advancement.
A new mentality
The developments of the last twenty have meant that they have developed differences in mentality between generations in many aspects, including work. Millennials, raised with the idea of work as a hard achievement, tend to have a more deferential feeling towards work.
On the contrary, Gen Z, strong in the belief that a job is a fundamental right, has a more detached attitude. In fact, the phenomenon of “quiet quitting”, which consists of making the so-called minimum wage in the workplace.
Others talk about “bare minimum Monday”, that is, starting the working week with minimal effort.
If Millennials were attracted toarchetype of the “girlboss”, jostling to climb the male-dominated corporate ladder, Gen Z women prefer a more relaxed approach to work that prioritizes work-life balance.
The data confirms what is already ironically represented by the memes: Gen Z works significantly less compared to previous generations. In 2022, people between the ages of 15 and 24 spent 25% less time in “work or work-related activities” in America than in 2007.
A new study by the IMF (International Monetary Fund) has analyzed the number of hours that people say they work, highlighting a clear paradigm shift: not long ago, young men and women aspired to work much more than older people years, while today they want a reduced work commitment.
According to an analysis by Jean Twenge, a psychologist at San Diego State University, in the United States the percentage of people of final school age (between 17 and 18 years old) willing to consider work as a “central part of life” is collapsed drastically.
Less propensity for entrepreneurship
Another consequence is Gen Z’s lower propensity for entrepreneurship. It is estimated that in the EU only‘1,1% of Gen Z’s run a business with employees, and this percentage has been decreasing in recent years.
Around 2010, according to Forbes magazine which draws up an annual list of the richest people in the world, a percentage of more than 1% were made up of Millennials. At the time there was in fact a boom in billion-dollar start-ups founded by people like Mark Zuckerberg (Facebook), Patrick Collison (Stripe) and Evan Spiegel (Snapchat).
A decade later just 0,5% of Zoomers exceeds one billion dollars in assets. Who among you knows the name of a start-up founded by a 20-year-old or a 20-year-old?
Also the quantity of innovations introduced from Gen Z it appears modest. According to Russell Funk, of the University of Minnesota, there have been fewer patents than in the recent past.
Let’s take into consideration the Billboard Hot 100, which lists the most popular songs in America. In 2008, 42% of hits were performed by Millennials; 15 years later, only 29% are Gen Z.
How long will Generation Z’s economic advantage last?
A recession would hit it hard, as it always has. Artificial intelligence could destabilize the global economy, although Gen Z is better positioned to benefit from changes in technology over time.
For now, though, Gen Z has time to do the things they want. Time and also money.
Sources:
Generation Z is unprecedentedly rich, “The Economist”, 16 April 2024
Millennials do the maths, “The Financial Times”, “Home&House” weekend supplement, 29-30 June 2024
