A new report from a British economic think tanks has found that Generation Z workers are out-earning their millennial counterparts at the same stage of life. But economists and analysts warn that higher nominal wages do not automatically translate into greater financial freedom, and that for a significant share of young people, the economic picture remains deeply troubling.
Gen Z Pay Is Outpacing Millennials — By 12%
The Resolution Foundation, a leading UK think tank focused on living standards, has found that real weekly pay for those born in the late 1990s was 12% higher at age 24 than it was for cohorts born in the late 1980s. More strikingly, those born in the early 2000s are earning more at 24 than any generation on record going back to the 1950s.
Charlie McCurdy, senior economist at the Resolution Foundation, said: “The living standards stagnation of the millennial generation has been well documented over the past decade. Many have speculated that the breakdown of generational progress has continued for Gen Z too. But 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.”
Millennials, typically defined as those born between the early 1980s and mid-1990s, entered the workforce during or shortly after the 2008 financial crisis — a catastrophic moment of timing that set off more than a decade of wage stagnation. They became the first generation in modern history not to enjoy higher disposable incomes than their predecessors.
Gen Z, by contrast, have benefited from a tighter post-pandemic labour market and a series of significant increases to the National Living Wage, the report states.
The lowest-paid workers — those in the bottom tenth of earners — saw their real pay rise by 36% between 2012 and 2025, driven largely by minimum wage escalation since 2016, according to the think tank report.
Younger Workers Seeing the Strongest Hourly Pay Growth
The gains are not confined to the very bottom of the income ladder. Workers aged 22 to 29 on median earnings saw their hourly pay grow by 15% over the same period, compared to just 4% for those in their 30s and 11% for the wider workforce, the think tank report states.
That disparity reflects a structural shift in how British employers are pricing entry-level and early-career labour — one that has moved disproportionately in favour of younger workers in recent years.
How Inflation Has Shifted Between the Millennial and Gen Z Eras
To understand why wages alone do not tell the full story, it is necessary to understand the very different inflationary environments each generation has navigated.
Millennials entered the workforce during or around the 2008 financial crisis — a period defined not by high inflation but by prolonged economic stagnation and near-zero interest rates. The damage for millennials was done through suppressed wages and a housing market that quietly but relentlessly outpaced their earnings.
Gen Z’s economic entry point has been starkly different. The post-pandemic period brought the sharpest inflationary surge in four decades. UK inflation peaked at over 11% in late 2022, driven by a combination of supply chain disruption, energy price shocks and surging demand as economies reopened.
Food prices, rents, transport costs and energy bills all rose sharply and simultaneously — hitting renters and early-career workers hardest, since they had no fixed mortgage to shield them from the price surge and no existing assets to offset it.
Research cited by Fortune found that Gen Z may have been left psychologically scarred by this inflationary environment, with Bloomberg analysis showing that 16 to 24-year-olds were among the most likely age groups to have raised their long-term inflation expectations.
Dayo Abinusawa, founder of London’s Awa Business School and a former lecturer at Cambridge University’s Judge Business School, told Bloomberg the ongoing battle with inflation “would have had a serious impact on the mindset of Gen Z workers.”
The contrast is telling. Millennials were shaped by a decade of low prices and low wages. Gen Z inherited higher wages — but in a world where the cost of everything had already reset to a higher level.
Research by Hamptons estate agency illustrates this starkly in property terms: a Gen Z buyer who purchased their first home in 2020 will be the first generation to see house prices fall in real terms during their first five years of ownership.
The average Gen Z buyer will pay £191,029 (approximately ₹2.1 crore) in the first half of a 30-year mortgage — roughly £97,000 (around ₹1.06 crore), or 103%, more than the equivalent figure for a baby boomer buyer, adjusted to today’s prices.
Higher Wages, But Do They Buy More? A Global Picture
The critical question is whether improved pay packets translate into improved lives. On that front, the evidence — across Britain, the United States, India, and beyond — is considerably more complicated.
Housing has emerged as the single sharpest dividing line between wages and genuine financial security, and it is a crisis that cuts across national borders. In the UK, Barclays’ latest Property Insights report found that while confidence in homeownership among 18 to 34-year-olds improved from 33% to 40% over the course of 2025, affordability remains a significant barrier, with nearly two-thirds of young prospective buyers citing high house prices as a major challenge.
According to tenant referencing service Canopy, renters in some parts of Britain are already spending as much as 40% of their monthly income on rent alone.
The picture is similarly strained in the United States. Research by the TEFL Academy, drawing on data from the US Bureau of Labor Statistics and US Census Bureau, found that despite a roughly 12% real increase in graduate starting salaries since 2005, salary gains have consistently lagged behind the rising cost of essentials, particularly housing.
The National Association of Realtors reported in 2025 that the share of first-time homebuyers in the US had fallen to a record low of 21%, while the typical age of a first-time buyer climbed to an all-time high of 40 years.
In India, the affordability challenge takes on a different but equally acute character. According to a report by proptech platform NoBroker, India’s urban housing market entered a structural affordability crisis in 2025, with new supply priced below one crore rupees contracting sharply across all major metropolitan areas. New property launches have become increasingly skewed towards the luxury segment, pricing out a significant portion of younger buyers. “A large section of homebuyers already feels priced out of the market,” said Saurabh Garg, co-founder and chief business officer at NoBroker.
Despite this, millennials and Gen Z together now account for nearly 90 to 95% of home purchases in India, with younger buyers reshaping the market through digital-first expectations and a preference for smaller cities.
Deloitte’s 2026 Gen Z and Millennial Survey, which gathered insights from more than 22,500 respondents across 44 countries found that approximately 40% of both generations are living paycheque to paycheque.
Nearly half of Gen Z respondents said they had delayed major life decisions, including homeownership, starting a family, and relocating, because of their financial situation.
In India specifically, the Deloitte 2025 Global Gen Z and Millennial Survey found that 36% of Gen Z individuals report feeling stressed or anxious all or most of the time, with financial pressure and access to affordable healthcare cited as key drivers.
The cost of living ranked as the top concern for 44% of UK Gen Z respondents and 52% of millennials surveyed by Deloitte — a proportion that broadly mirrors findings in comparable economies worldwide.
The Neet Crisis: A Generation Within a Generation Left Behind
The Resolution Foundation’s upbeat findings carry a significant caveat. The pay rebound, it cautions, applies only to those who have managed to enter the workforce at all. For a growing number of young people, that first step has proven elusive, states the think tank.
The number of 16 to 24-year-olds not in employment, education or training — commonly referred to as Neets — has now reached approximately one million. UK’s ex-Labour minister Alan Milburn warned last month that without urgent government action, Britain risks a 25% rise in that figure to 1.25 million by the early 2030s, risking a “lost generation” of young people permanently detached from economic life.
“For a significant share of younger members of Gen Z, their careers have not got off the ground at all,” the Resolution Foundation noted. “Britain’s Neet crisis presents a huge, long-term challenge for Gen Z, and tackling it should be a top priority for the government.”
The scale of competition facing young jobseekers has been laid bare by separate data. According to the Institute of Student Employers, 1.2 million graduate applications were submitted in the UK for just 17,000 available graduate roles — a ratio that underscores the structural mismatch between qualification levels and available opportunities.
External Threats to the Pay Rebound
Even for those who are employed and benefiting from improved wages, the Resolution Foundation warns that the “good news story for Gen Z is already under threat.” Real wages may be poised to fall as higher prices and weaker economic growth — driven in part by the ongoing conflict in the Middle East — bear down on household incomes.
PwC’s 2025 Global Workforce Hopes and Fears Survey, which canvassed more than 2,000 UK workers across 28 sectors, found that Gen Z professionals were the most motivated and optimistic generation in the British workforce. However, nearly half of the youngest working cohort reported feeling overwhelmed on at least a weekly basis, and around a third said they feel stressed all or most of the time.
The Longer View
Analysts note that the generational wage picture is likely to shift further as Gen Z ages and accumulates experience. A 2025 Bank of America report projected that Gen Z is on course to become the wealthiest generation by 2035, as the global population of the cohort expands and a significant intergenerational wealth transfer from baby boomers gets underway.