Gen Zers face a Sisyphean task when it comes to building wealth: They’re richer than you think, but have no spending power

On paper, the youngest working generation is doing relatively better than one might think. But even if some lucky Gen Zers are staying above the fray or the cohort on average is raking in relatively more than other generations were at the same age, that doesn’t match the overarching picture of financial insecurity. That’s all to say, it’s much like one of those optical illusion books from the Zoomers’ childhood: Step away and the picture of the generation’s economic power morphs, blink once more (or dive deeper into the data), and watch it shift back. 

You don’t have to look far to see stories of Gen Zers taking on second jobs to survive, much less build wealth. Hustling to evade precarity during a time of layoffs, many still don’t have enough income to have extra spending power. As major milestones like having a child, buying a house, and retiring all become more pricey, Gen Z has started to lose faith in their ability to get ahead. That’s why 74% of millennials and 65% of Gen Zers report feeling they’re “starting further behind financially” than prior generations at the same age, per a 2023 USA Today survey by Harris Poll. 

So how is the relatively rich generation also struggling so much? Hampered by inflation, student debt, the pandemic, and a cherry-on-top thorny housing market, Gen Z’s money doesn’t seem to stretch as far as it once would have.

One way to see Gen Z’s relative limbo is by looking at their wage growth. The Economist notes that Gen Z is experiencing the highest “young person premium” in terms of hourly pay growth since data collection began in 1998. Recently, the U.S. pay growth for those 16 to 24 grew 13% in one year, compared to just 6% for older employees aged 25 to 54. 

Of course, as a virtue of being earlier in their career and generally making less than their senior counterparts, Gen Zers have more room for growth. And they’re likely beneficiaries of the Great Resignation, using their relative leverage to leave their overworked and underpaid jobs in the restaurant and service industries to fight for a livable wage. “Rather than being trapped in jobs with low pay or unstable schedules, these workers sought out roles that were a better fit for their own personal and professional goals,” researchers and professors Daniel Schnider and Kristen Harknett write in a Harvard Kennedy School report on young service-sector employees. 

Separate data from the Pew Research Center adds to the narrative that Gen Z is in relatively better shape than other young people of different eras. The median pay (adjusted for inflation) for those aged 18 to 24 was just over $15,000 in 1993. Zoomers in 2023 were raking in about $20,000. Older Gen Zers are also faring better, making almost $10,000 more than young adults three decades prior. Even so, young people’s money doesn’t go as far as it once might have. Inflation remains relatively stubborn, as groceries and everyday costs still take a larger chunk out of households’ paychecks. Dealing with the high cost of living and being saddled with disproportionate debt as related to student loans, Gen Zers experience a lot of pushback when it comes to building wealth.

And a paper from American Enterprise Institute’s Kevin Corinth and Jeff Larrimore of the Federal Reserve Board finds that each young generation is perhaps not as doomed as we see them to be. They find millennials are doing relatively better than Gen Xers were at the same age. The Economist takes it a step further, citing federal data that explains the average 25-year-old makes more than 50% more than baby boomers did at the same age, with a yearly household income of more than $40,000. After taking control of the housing market, boomers now account for more than half of the nation’s wealth. 

A major source of wealth building has become increasingly evasive for the youth of today, as millennials and Gen Zers struggle to afford a house. Many have been forced to live at home to save up and even start to rent an apartment. More than three-fourths of millennials and Gen Zers report they are somewhat or very dependent on their parents for money, according to a recent 2023 Experian survey.

While boomers seemingly have a lock on the housing market, many Gen Zers are “outpacing young people of the past,” according to an analysis from RedFin. While their home ownership stagnated this past year, Gen Zers were able to pounce on the pandemic-era record lows a couple of years ago, according to the real-estate company. And of course, there’s a larger story of generational inequity at play. Some ultra-rich Gen Zers might be skewing the average Gen Zer financial statistics. Many young people who can take a stab at the current housing market have depended on older generations for help with a down payment.

“Because housing costs have soared so much, many young adults with family money get help from Mom and Dad even when they have jobs and earn a perfectly respectable income,” Redfin’s chief economist Daryl Fairweather once said.

So, yes, Gen Z is relatively rich compared to their parents and grandparents. But the nation is almost saying ‘“your money is no good here” to the young people are still forced to depend on older generations to get by.