Pay packets of Gen Z outstrip their millennial predecessors

Latest Resolution Foundation analysis has shown that today’s 24-year-olds earn more than any previous cohort since the 1950s. The data shows that their average weekly pay is 12% higher than peers born in the late 1980s. That is positive for many young workers, despite concerns about student debt and job opportunities. 

There has been widespread concern that this stagnation will have continued for Gen Z – those born from the late 1990s onwards. However, Resolution analysis of newly available data for these younger age cohorts suggest that they’re experiencing a mini rebound in pay packets.

The research will show that real weekly pay at age 24 those born in the late 1990s was 12 per cent higher than for cohorts born in the late 1980s.cIn fact, at age 24, those born in the early 2000s are earning more than any other age cohort going back to those born in the 1950s.

However, the Foundation cautions that this surprise positive pay rebound for Gen Z workers is under threat on two fronts.

First, real wages are on the brink of falling again later this year as the war in the Middle East has led to higher prices and weaker economic growth in Britain. Indeed, real wage growth in the private sector have been falling since last October.

Second, the number of 16-24 year olds not in employment, education or training (NEET) hit the grim milestone of one million earlier this year – the first time the number of NEETs has reached six figures since 2012. For a significant share of younger members of Gen Z, their careers have not got off the ground at all.

Britain’s NEETs crisis presents a huge, long-term challenge for Gen Z, says the Foundation, and tackling it should be a top priority for the Government.

Reducing the number of NEETs will enable more Gen Z workers to start their careers and hopefully enjoy the kind of pay rebound that their slightly older peers have enjoyed.

Charlie McCurdy, Senior Economist of 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.

“But this good news story for Gen Z is already threat. 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.”