Two decades after fears of a prolonged decline in living standards for younger generations began to take hold, new evidence suggests that some young workers in Britain are experiencing stronger earnings growth than their predecessors.
Research published by the Resolution Foundation indicates that people born in the late 1990s and early 2000s are earning more in their mid-twenties than millennials did at the same age. The findings offer a notable contrast to years of concern about weak wage growth, high housing costs and broader economic challenges facing younger adults.
Gen Z Records Stronger Earnings Than Previous Generations
According to the Resolution Foundation, workers born in the late 1990s were earning 12% more in real weekly terms at the age of 24 than people born in the late 1980s. The think tank’s analysis found that this generation has benefited from a modest recovery in wages following the long-lasting effects of the 2008 financial crisis.
The report also found that those born in the early 2000s were earning more at the age of 24 than any comparable age group dating back to the 1950s. This marks a significant shift from concerns that Generation Z would face the same difficulties experienced by millennials during the early stages of their careers.
Millennials, generally defined as those born between the early 1980s and the mid-1990s, entered the labour market during or shortly after the financial crash. Their working lives were shaped by an extended period of weak wage growth, and they became the first generation in modern times not to achieve higher disposable incomes than their parents.
Charlie McCurdy, senior economist at the Resolution Foundation, said the stagnation in millennial living standards has been widely documented over the past decade. According to McCurdy, many observers believed the same pattern would continue for Generation Z, yet the latest data points to a different outcome during the early years of their working lives.
“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,” McCurdy said.
Economic Risks and the Growing NEET Challenge
Despite the positive earnings data, the Resolution Foundation warned that the improvement may not be guaranteed to continue. According to the think tank, higher energy prices and weaker economic growth linked to conflict in the Middle East could place renewed pressure on household finances.
The report noted that real wage growth in the private sector has already weakened since last autumn, raising concerns that gains seen by younger workers could come under strain if economic conditions deteriorate.
Another issue highlighted in the research is the growing number of young people who are not in employment, education or training, commonly referred to as NEETs. The Resolution Foundation reported that the number of people aged between 16 and 24 in this category exceeded one million earlier this year.
The figure underscores a very different reality for a substantial section of Britain’s younger population. While many members of Generation Z have seen stronger earnings than previous cohorts, others remain disconnected from both work and education.
McCurdy said the rise in NEET numbers presents a serious challenge for policymakers. He argued that addressing the issue will be necessary to help more young people establish successful careers and maintain the progress that some Gen Z workers have achieved in wages and wider living standards.
