Gen Z Is Out-Earning Britain's Millennials, but the Rebound Is Fragile
After years of being told they were priced out of adulthood, Britain's Gen Z workers are out-earning the millennials who came before them. The catch is who gets left out.
A 24-year-old in Britain today takes home about 12% more, in real terms, than someone the same age did a decade ago. After years of headlines about a generation locked out of the basic markers of adulthood, that single figure marks a real break in the trend.
It comes from the Resolution Foundation, whose new analysis found that real weekly pay at age 24 for people born in the late 1990s was 12 per cent higher than for those born in the late 1980s. At 24, the cohort born in the early 2000s is now earning more than any group going back to those born in the 1950s. The "first generation" label has quietly switched owners: it was the millennials, born between the early 1980s and the mid-1990s, who became the first cohort not to enjoy higher disposable incomes than the one before them.
That stall was not bad luck spread evenly. Many millennials started work around the 2008 financial crisis and then spent a decade inside the longest squeeze on real wages in modern British history, the breakdown of generational progress that Resolution Foundation president David Willetts first named in his 2010 book The Pinch. Gen Z, by contrast, walked into a tighter labour market and, for those in jobs, better starting pay.
Here is where a pay number stops being good news and starts being a payslip. The rebound only helps people who are actually drawing a wage, and the Foundation flags two threats to it. The first is the wider economy: real wages are on the brink of falling again later this year, with the war in the Middle East pushing up prices and weakening UK growth. Private-sector real wage growth has been slipping since last October, the same squeeze visible in Britain's stubborn inflation figures. A rebound that arrives just as prices climb again can be undone in a single year, and 12 per cent of a starting salary is the difference between covering a rent increase and falling behind on it.
The second threat is starker, because it is about young people who never reach a payslip at all. The number of 16- to 24-year-olds not in employment, education or training hit one million earlier this year. For that group, the cheerful averages are meaningless; their careers have not begun.
Charlie McCurdy, a senior economist at the Foundation, put both halves plainly.
"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 under threat."
Charlie McCurdy, senior economist, Resolution Foundation
The fuller study lands later this week, and the distinction it draws is the one worth keeping. Britain has not solved the problem its young people inherited; it has split them into two groups. One has clawed back ground its older siblings lost. The other is watching from outside the labour market entirely, and for them the gap is not closing at all.
