Generation Z is unprecedentedly rich
economist.com
economist.com
For example: Over the last decades housing prices, college tuition & stock prices have significantly outpaced the average inflation rate. Older generations could buy up these assets at a discount (at least compared to Millennials & Gen Z).
In the 1990s and 2000s, it was very rare to travel abroad - a Eurotrip or Japan trip was a once in a lifetime experience. Nowadays, my entire friend group in the mid 20s-early 30s have traveled to Europe and Japan multiple times, as well as further afield, and an Amex Gold or Platinum card or a Chase Sapphire is very common among 20 year olds now.
Travel, quality of housing, etc have all risen among our cohort compared to Gen X or older millennials at a similar age (millenial hipsters were living in Brooklyn in the 2010s because they were broke. Gen X grungeheads were living in CapHill/Mission in the 1990s because they were broke).
Gen Z is at most 25. Give them 5-10 years and they themselves will end up buying property, especially because a lot of Gen X parents and Boomer grandparents do help out.
The article also takes your point into account:
“Some Gen Zers protest, claiming that higher incomes are a mirage since they do not account for the exploding cost of college and housing. After all, global house prices are close to all-time highs, and graduates have more debt than before. In reality, though, Gen Zers are coping because they earn so much. In 2022 Americans under 25 spent 43% of their post-tax income on housing and education, including interest on debt from college—slightly below the average for under-25s from 1989 to 2019.”
People who "make it" often feel like their path was trivial. While people who haven't "made it" often feel like finding the path to success is impossible because it lies in their past or was never accessible to them.
It's easy to maintain your habits and it's extremely hard to change your life's course.
Expectations of "middle class" life have inflated.
We can afford a single family house with the picket fence - but it won't be in Fillmore or Brooklyn anymore, because they are now luxury neighborhoods.
We can afford multiple vacations, but it needs to be abroad, not the Catskills or Redneck Riviera.
We can afford to eat out, but it's not going to be McDs or fast casual - it has to be fancy and instagram worthy.
> finding the path to success is impossible because it lies in their past or was never accessible to them
Exactly.
A subset of Gen X and Boomers did very well in the 1980s-2010s. Their kids are Gen Zs who rail against boomers but will gladly take their parents help to buy a condo or townhouse in SF or Manhattan.
Intergenerational wealth is now a thing, and isn't going to change.
American society now has the same kind of "me-me-me" mentality I see in Asia (both developed like Japan or Singapore, or developing like China and India), the Americas (Mexico, Brazil, Colombia), or Eastern Europe (Israel, Ukraine, Russia, Romania, etc).
The only way to succeed in this kind of a society is to be ruthless. Most Americans are NOT. You even see that here on HN, with people complaining about educated Immigrants doing better than educated Americans.
You need to be ruthless in a low trust society, and it's the same now in the US.
People like to blame immigrants or the "other" but at the end of the day, society has specialized.
Either you build the skills to specialize, or you don't and wither away.
This has happened in every country from Japan to Jordan.
The difference is, lots of people in countries like Japan or Jordan still remember how actual poverty feels like, and will work their hardest to prevent something like that.
Most Americans have now grown up with 3 generations of surplus.
It was always the immigrants that did the dirty work and eventually assimilated - look at anti-Italian, anti-Mexican, anti-Japanese, anti-Armenian, anti-Jewish, anti-Slavic .... sentinment in the US.
Their kids eventually assimilate and also lose that ruthlessness.
Or you can coast on the wealth built by the hard working generations before you and let the immigrants specialize and work hard while you rent seek them. This goes for people and for countries.
Hasn't it always been a thing, though?
I'm sorry for people whose family is not in a position to, or chooses not to, help them, but I think it's always been pretty common (albeit not universal) for parents to support their offspring.
Until the 2010s, it was fairly socially expected that you'd move out of your parents house at 18 and either find a job or go to college, and do all that on your own dime.
It was always a weird concept for me coming from an immigrant family where we all pitch in together to help each other, but a relatively large minority of Americans (maybe 15-20% actively chose not to) and a large majority (maybe 20-30%) didn't have the means to.
If you're in your 20s-30s, best case your grandparents grew up in the 1950s-60s - which absolutely wasn't a walk in the park, but the average American was miles away the richest person on the planet back then, and the "nuclear" family was the structure of choice (that's why it's called the nuclear family - 1950s techno-optimism a la Fallout)
On the other hand, if your family immigrated then the familial ties based system continued to exist.
>Hasn't it always been a thing, though?
Family size is a factor.
These same selfish people will be angry when any break at all is given to a colleague do to family circumstances (daycare closed for the day? kids have the flu?), but will expect to be taken care of just like the rest of us when they get old, despite the fact that they didn't contribute any children into the labor pool to provide for that care.
That, and people in their 20s and 30s are much less likely to have kids than people of the same age group in the '90s, so the logistics around traveling abroad can be much easier. The increasing interconnectedness of the world has similarly provided much more exposure to the international world, while technology (including things like airbnb and google translate) have removed many of the barriers.
I don't think more "elder gen z" and millenials are traveling abroad because they're overall more well-off. Housing is much less affordable and I think this is part of the reason we're seeing a decline in birth rates.
That's why I gave examples of Western Europe (London, Paris) and Japan (Tokyo).
The prices on arrival are the same as traveling to Austin or Dallas.
I love traveling to Thailand or Vietnam, but most American travelers aren't going there.
> That, and people in their 20s and 30s are much less likely to have kids than people of the same age group in the '90s
Aka, higher disposable income compared to their peers in past cohorts.
This is actually a good point and something I don't think was brought up in the article - my parents had me in their 20s. I probably won't have kids til my late 30s.
Kids are very expensive.
But the majority of Europe is cheaper than the majority of the U.S. (think Greece or Spain or Portugal or even most of Germany)
Japan also is much cheaper to travel in than the U.S.
Personally most people I know who do international traveling have avoided London and Paris due to the high cost of travel.
I have five. They don't have to be.
No worries, I didn't.
The author is using a poor metric to compare. It is not the % of income spent on housing that matters, but the % spent per unit housing quality. If you compare a boomer and a gen Zer, both spending X% of their income on housing, what quality housing is that getting them in comparable areas?
My girlfriend's parents could each afford their rent on two shifts of waiting tables when they were young, and they lived in nice areas of San Diego. Trying that today will have you living in a bad area with roommates.
I’m definitely on the introverted side, but I (Gen X) feel like I socialized in-person way, way more than 7 hours per week in my teens and early 20s and feel that was entirely typical.
By the 2000s, was under an hour per day typical? Most of that was pre-smartphone.
- Kids rely on parents for transportation. Which usually means structured activities like camps etc over informal socializing.
- Kids getting around in the outside world is dangerous. We were wondering if our kids and friends could walk to a nearby ice cream shop. I think this would be more normal outside the US, it here it requires crossing a few intersections drivers cut through to get around.
As such I’d hypothesize kids will retreat to social media and virtual tools to connect because the real world isn’t that friendly.
Miles traveled per person [0] peaked in 2005 and has been down ever since, but my and my peers' childhoods in suburban America in the 2000s was way more free range and unstructured than what I'm seeing among children in the same neighborhoods today.
Before we could drive we rode our bikes everywhere. Once we could drive some of us got cars, others made a habit of regularly borrowing the family car or had a shared "kids" car. We found ways to meet up, we made friends with kids who lived in our immediate neighborhood. We had the regular set of structured activities that were popular (some sports, band, orchestra), but hours per week per child spent on after-school activities that were organized by adults was very small among my friends (fewer than 2-3) relative to today.
And all of that was at the peak of driving in the US. The USA hasn't gotten more car-centric since then, but children have lost freedoms. Cars can't explain that.
[0] Second graph: https://fredblog.stlouisfed.org/2018/12/staying-up-to-speed-...
Usually this is rebutted with a reference to apparently skyrocketing housing costs, thankfully the author addresses this shortly after.
“Some Gen Zers protest, claiming that higher incomes are a mirage since they do not account for the exploding cost of college and housing. After all, global house prices are close to all-time highs, and graduates have more debt than before. In reality, though, Gen Zers are coping because they earn so much. In 2022 Americans under 25 spent 43% of their post-tax income on housing and education, including interest on debt from college—slightly below the average for under-25s from 1989 to 2019.”
This aligns with my anecdotal experience talking with college students and new grads today.
Does he, though? He only mentions how much gen-z is SPENDING on housing and education, not what they're actually getting for their money. Most gen-z I know have given up on home ownership, and those who did buy are buying some pretty shitty parcels at exorbitant prices. They're also choosing less expensive education options.
But the main assets that most people build from (housing and education) are either not there or less effective...
I expected it to be about the assets they hold.
The Nasdaq increased more than 5 fold over the last 10 years and more than 10 fold over the last 20 years.
If parents of Gen Z gave their children $100k and taught them portfolio management, most of them could probably consider retiring without ever working for somebody else.
Good employment opportunities give you the power to build wealth and access high QoL perks like remote work and more free time to live life, that previous generations didn't have.
Try not having good employment and see, you're not thinking about assets or complaining about a 2h commute to the office but about paying for food and rent.
According to Google, the average baby boomer has $1.2M in assets.
If they had given 10% of that to their newborn and invested it in software companies, the child would already be as wealthy as the parent now. And could focus on asset allocation.
Instead of spending decades with other stuff to then finally come to learn about asset allocation.
10 years in the Nasdaq beats 20 years in the S&P 500.
This chart:
https://fred.stlouisfed.org/series/USSTHPI
Seems to indicate house prices tripled since 2000?
It takes a bit to overcome:
https://economics.td.com/ca-labour-market-during-recession-c...
The parents of Gen Z are mostly Gen X.
Adjust for inflation and this generation will no longer appear rich.
Also, this article cites there are “6000 Zoomer chief executives”. I wonder what it’s like to have a 20 yr old as a CEO.
All my bosses/superiors/ceos have been decrepit old fools that need to be put out to pasture.
Maybe it’s the same thing except a having a heightened or elevated sense of arrogance. High risk tendencies, and maybe their anxiety runs the company. I would hope they are more calculating though.
It does beg the question though, where all the Gen Z founders? I earnestly cannot think of a single one. Anyone have a name that comes to mind?
There are plenty of Gen Z/young Millenial (24-32) founders, VCs, and execs. We just deviate towards B2B SaaS now.
I don't want to name names but most of YC's best startups are B2B firms founded by people in the 24-32 age cohort.
> In 2007 the average net income of French people aged 16 to 24 was 87% of the overall average. Now it is equal to 92%. In a few places, including Croatia and Slovenia, Gen Zers are now bringing in as much as the average.
So it's relative, not just nominal amounts.
> Gen Z is also grabbing power: America now has more than 6,000 Zoomer chief executives and 1,000 Zoomer politicians.
I can’t see most of the article—does it go on to qualify any of this? Or to compare it to other generations at same age? What’s the median size of the firm these “chief executives” run? What does “politician” mean? School board? Town council in a city of 1,500?
In general I’d like to see a lot more use of median through all of what I could read and what I’ve seen in this thread, and less mean.
In the 1990s and 2000s, it was very rare to travel abroad - a Eurotrip or Japan trip was a once in a lifetime experience. Nowadays, my entire friend group in the mid 20s-early 30s have traveled to Europe and Japan multiple times, as well as further afield.
Travel, quality of housing, etc have all risen among our cohort compared to Gen X or older millennials at a similar age.
The biggest issue with this is that the zero point in interest was practically reached. The biggest influence of "inflation", the biggest cost that people have, is housing. To be "smart", inflation didn't consider the cost of houses--because that isn't what people would pay each month--but instead some weighted average of mortgage costs and rents. As house prices increased at rates higher than inflation, interests rates were dropped which keeps mortgage rising at a lower rate and this "keeps inflation under control" but obviously that cannot continue forever.
There were lots of people that objected to that measure of inflation. Now they bump the interest rate "to keep inflation under control", and suddenly young people cannot afford a mortgage anymore: the principal has been increasing above inflation over the years, and suddenly the interest rates also jump. You're double screwed. Add to that education costs, which aren't factored into inflation calculations but are becoming an increasing cost of life for the young, and here you are.
So to me, the economist is comparing apples and oranges here. The way we measure inflation isn't useful for this comparison between these cohorts.
A crude--but in this case useful--measure of inflation is just average house cost + average education cost. This is enough to understand the woes of generation Z because education costs and the costs of houses have been increasing by a huge rate and more and more of them require higher education, and then their parents are less and less able to help them with that education due to their own fights with inflation and (in America) that private education becomes more and more necessary.
Their salary to CPI ratio may be better than millenials at the same age, but that just isn't a meaningful indicator of purchasing power for the things they want to buy or for the reality of their financial situation (education debt).
The sticker prices for tuition have drastically increased, but scholarships & bursaries have kept pace, so the average price paid for residents hasn't exceeded inflation. For example, tuition at Harvard for anybody with a household income of less than $150K is $0. Average tuition has gone up drastically, but it is foreigners who are footing the bill. If you exclude foreigners, the deviation is greatly up but the average isn't.
And for housing, how do you accommodate for rising standards? The kind of cramped shared roomming that I used when I was 19 just doesn't exist anymore. The closest approximation is 4 people splitting a 2br apartment. That's less than what I paid, CPI adjusted.
The article and I are talking about early career professionals (mid twenties) and I am trying to particularly understand the ones around me who are struggling to make a housing purchase in the near future. Also, I would never use Harvard as a rubric of average and your decision to use it as an example truly perplexes me. Instead I suggest you have to look at averages and not at isolated price points of particular colleges to understand the woes of a generation. From, https://thecollegeinvestor.com/32031/average-student-loan-de...
> From 1990 to 2013, the growth of student loan debt surpassed the growth in students, going from $24 billion to $110 billion per year, a 352% increase in loans. During that same period, the number of students borrowing increased by 40%.
That is far greater than inflation. The reimbursements may have also been increasing over inflation, but did not compensate the cost increase for the average person I am concerned with.
Standards are not rising. These early professionals will get smaller homes in farther away neighbourhoods for much more, if they could even afford them in the first place.
Which is a very different problem from not being able to afford food.
What is it you’d like to buy but find yourself unable?
apparently, Americans can afford more things now than ever in history
That said, this article is probably still true for some kids. I put together a custodial IRA for my teenager funded with a dollar-for-dollar match to her gross earnings while she’s underage and she’s a prolific saver too. She’ll graduate high school with a higher net worth than the American median, but that’s mostly because of the typical American debt load more so than the raw amount.
Since we are directly paying for her college we hope that this will guarantee her a decent retirement some day, which so many of her generation will likely never have.
Also for commenters saying Gen Z is the kids of Gen X, that’s probably true but many of us are older millennials (xennials) too. I am not quite 40 yet and my kiddo turns 18 this year. The oldest millennials are 43 right now.
> The average 25-year-old Gen Zer has an annual household income of over $40,000, more than 50% above the average baby-boomer at the same age.
Might be worth mentioning that this isn't inflation corrected. Oh and of course averages don't tell the whole story.
> Gen Z’s economic power was on display at a recent concert by Ms Rodrigo in New York. The mostly female teenagers and 20-somethings in attendance had paid hundreds of dollars for a ticket. Queues for merchandise stalls, selling $50 t-shirts, stretched around the arena.
That says literally nothing about the economic power of a whole generation.
> In 2022 Americans under 25 spent 43% of their post-tax income on housing and education, including interest on debt from college—slightly below the average for under-25s from 1989 to 2019.
Aren't way more Americans up to 25 still living with their parents, compared to previous generations, because of the high housing costs? I imagine living with your parents is much cheaper than any other housing option.
> Their home-ownership rates are higher than millennials at the same age.
Well, millennials had a worse start for sure, however what about home-ownership of other generations at that age?
> Gen Zers are also producing fewer innovations. According to Russell Funk of the University of Minnesota, young people are less likely to file patents than they were in the recent past.
Fresh off the press this got apparently debunked: https://www.unibas.ch/en/News-Events/News/Uni-Research/Resea...
I could go on.
The median personal income in 1975 has been $26,450 [1], although that's across all generations (not sure if your number is).
Edit: Unfortunately the statistics about the median household income [2] don't date back that far.
The main issue is that they're basing a large part of their claims on ZIRP-era data, but the economy (obviously) changed completely once the 14-year gush of money was turned off in summer 2022. For example, "Quiet quitting", which the article cites to support its argument, was only possible in the peak ZIRP period 2020-2022 and today is unimaginable. Really, I would expect The Economist of all outlets to grasp this.
Also, the article is very light on specifics, e.g. it says "Their home-ownership rates are higher than millennials at the same age. They also save more post-tax income than youngsters did in the 1980s and 1990s." OK, but how much? If it's a few percentage points or less, that's largely noise, but if it's a double-digit amount, it's a genuine difference. As it is, we don't know, so the "unprecedentedly rich" claim in the headline is unsubstantiated.
Besides this, a bunch of areas related to inflation and prices are handled sloppily. For example, the article says Zoomers are paying about the same percentage of income as previous generations for housing and education, but it doesn't look at the quality of either -- I wouldn't be surprised if Zoomers are getting less for their money (less square feet of housing, degrees with worse job prospects, etc.). Also, as someone who lives in a southern European country, I can tell you that plummeting unemployment numbers in places like this (they cite Spain's and Greece's in a graph) are due to people emigrating en masse in search of high-paying, year-round jobs.
All in all, my biggest takeaway from this article is to confirm my impression that The Economist today is intellectually sloppy and baldly makes arguments with weak or no evidence in support. I'd gotten that impression after having subscribed for a few weeks not long ago, and this article, which I might have written off as a fluke otherwise, cemented it.
This article makes the same mistake.
Pundits should be ignored. Perhaps we will now see auto-generated pundit BS. Because "AI" is trained an old version of the web where people believed this pundit garbage.
LOL
Often it seems vaguely plausible. But sometimes - as here - it's just silly.
garbage article as one would expect from the economist, gen z is slightly ahead of millenials and gen x if you use the government inflation and unemployment statistics
the fact their graphs show boomers as poorer than X, millenials and Z at the same age tells you all you need to know
Which graph shows that? All I see is employment, income, and wage increase graphs at the same stage of life for each generation. It says zoomers at 25 are wealthier than boomers were at 25, it’s not comparing their wealth in 2024.
Is your objection primarily based on disagreement with the inflation metrics they’re using?
it's comparing income at the same respective ages and that is completely plausible. I'm a millenial, child of boomers. Both were lower middle class workers, I'm the first in the family to go to uni. This is a very common situation. I'm better off than my parents were at my age.Like, ask any parents of millenials what they had growing up in the 60s compared to what we had in the 90s and the education access I had compared to what they had.
owning a house is cooler
You really think a millenial or gen z woman today in her 20s/30s with a degree and a job would want to trade that for being locked in a house without a job, any modern appliance and less space than she has in her flat?
https://www.psychologytoday.com/us/blog/pressure-proof/20130...
That strategy won't get you far.
Of course, one article is a drop in the bucket. But take it for what it is, not reject it because it doesn't follow the narrative you have. People like the narrative of generational politics that is currently popular, but that's probably because it gives them something to blame that's easy to point at... yet the plot holes are massive and obvious when you open your eyes to them.
For “rich” you’d need to look at wealth not employment %.
The younger generations are miles behind previous generations on metrics such as age constant net wealth. eg look at the chart in this and contrast that with the economists take:
https://www.google.com/amp/s/www.dailymail.co.uk/news/articl...
(Crappy amp link sorry - on mobile) it’s from page 31 here
https://www.nber.org/system/files/working_papers/w27123/w271...
> It seems to think the chart gets rosier for the young.
That seems comical optimistic to me. Between gig economy, covid and rising cost of living, unaffordable housing, college loans I struggle to see the young ones building rapid wealth all of a sudden. If anything id expect even worse than where that chart stops.