Gen Z is making less than millennials made a decade ago.
A new study by TransUnion revealed that Gen Z between the ages of 22 to 24 made an average of $45,493 in 2023. A decade ago, millennials at the same age were making $51,825 (adjusted for inflation). That puts Gen Z’s debt-to-income ratio slightly higher than millennials, coming in at 16.05% compared to 11.76%.
So what’s led to the difference?
TransUnion says this is likely because Gen Z has come of age during a high-inflation economy. Most elder Gen Zers entered the job market in June 2022, right as inflation hit a new peak and the consumer price index increased by 9.1%. Inflation has remained fairly high since then, and there’s no signs of it coming down anytime soon.
It’s no wonder that 14% of Gen Z feels “extremely stressed out” about their financial situation, compared with 8% of millennials a decade ago. That’s almost the exact opposite of those who feel “extremely confident” in their finances, with 8% of Gen Z saying so now and 13% of millennials in 2013.
It certainly doesn’t help that Gen Z is relying more on credit cards than their millennial counterparts at their age. According to the report, 84% of 22-24 year olds had at least one general-purpose credit card in 2023, compared to only 61% of 22-24 year olds in in 2013.
“It’s no surprise that in this economic climate, one in which the cost of living is significantly higher relative to a decade ago, younger consumers are increasingly turning to credit products to bridge their financial needs,” said Jason Laky, executive vice president and head of financial services at TransUnion. “This is a demographic that is younger and newer to the workforce and accordingly, is likely commanding a lower salary at an earlier point in their career. As long as inflation remains elevated and the cost of goods remains so as well, balances across products such as credit cards, personal loans and auto are likely to continue to grow.”
