A new study conducted by the Economic Policy Institute reveals that Generation Z is grappling with harsher financial circumstances than Millennials at their age. Sharp differences are noted in terms of inflation, income stability, and housing affordability. According to the findings, this generation, which includes young adults born from 1997 onward, is “extremely stressed out” about their financial futures.
The research indicates that the economic landscape has changed dramatically over the past two decades, with Gen Z entering the workforce during a period of heightened economic volatility and lower employment stability. This has been exacerbated by the COVID-19 pandemic, which has disproportionately impacted younger workers in service industries and gig economy roles.
One of the study’s key findings is that real wages have not kept pace with inflation for Gen Z. In contrast, Millennials were more gradually introduced to economic hardships related to the 2008 financial crisis. The current economic environment is said to “reflect higher inflationary pressures on Gen Z,” leading to significant challenges in meeting everyday expenses and saving for the future.
The economic cards are stacked against this new generation,
said Dr. Emily Benson, one of the study’s lead researchers.
Housing costs, education expenses, and healthcare have all risen sharply at a time when wages have remained relatively stagnant when adjusted for inflation.
The study also highlights a shift in financial priorities and behaviors. Unlike Millennials, who witnessed the slow recovery from the 2008 crisis during their formative years, Gen Z faces immediate, high-impact economic challenges. This has led to a cautious approach towards significant financial commitments like home ownership and higher education.
Mental health is another critical area affected by financial stress, with many Gen Z individuals reporting feeling “extremely stressed out.” This affects their personal well-being and has broader social implications, as financial anxiety can contribute to decreased productivity and engagement in the workplace.
Policymakers are being urged to consider these findings in their legislative efforts, with suggestions including enhanced financial education, more robust support systems for young workers, and policies aimed at stabilizing housing and healthcare costs.
As the study concludes, with significant changes, Gen Z might avoid long-term economic disadvantages that could shape their financial behaviors and economic health far into the future.
Source: THE HILL May 13, 2024
