From Gen Z to Millennials, young Australians are truly in a mess

Until very recently, Australians were, on average, the richest people on earth. Though we dropped a couple of spots over the COVID lockdown years, we are still comfortably sitting at the top of the pack among nations like Switzerland and the United States.

As fun as that fact may be, for the vast majority of Australian Millennials and Zoomers (Gen Z), it sounds like a bad joke aimed at reminding them just how financially hard life is right now, and how economically screwed so many of them are.

While it may make you uncomfortable, it’s an irrefutable fact that younger people are vastly more disadvantaged than older ones.Credit: Dionne Gain

The realities of younger Australians and older Australians have never been further apart or more alternate than they are right now. At this point, that’s a well-documented, irrefutable fact, no matter how uncomfortable it makes you.

And while intergenerational bashing is fast becoming something of a national sport, what’s arguably more worthy of discussion is not how Boomers screwed Millennials or which now-retired politicians we should point our collective pitchforks at, but rather the relationship currently being formed between the younger cohorts – namely Millennials and Zoomers.

In May, the Australian Bureau of Statistics released its annual employment data that, at first glance, painted a relatively stable story. Upon closer reading, though, a figure of greater significance was found.

Though the unemployment rate for May 2024 sat at 4 per cent (a rise from the previous 3.5 per cent figure but a drop from January’s 4.1 per cent), the number of hours Australians are working has dropped noticeably, declining from an average of 138.7 hours last year to 135.9 hours this year. So while a healthy portion of people are still employed, the rate of underemployment is on the rise.

At particular risk of underemployment are those entering the workforce as young adults – Gen Z (those born between 1997 and 2012). Historically, the youngest members of the workforce are not only paid the lowest wages, but also enjoy less job security in an increasingly casualised workforce.

This means that young people are, on average, earning less at a time when the cost of living is at a historic high.

The good news is that the youngest members of Gen Z are still in primary school. The oldest, though, at 27, have not only finished high school, but have well and truly entered the workforce.

Those born smack bang in the middle of the Zoomer gang are particularly interesting. At roughly 20 years old, these Zoomers are at the beginning of their adult working lives.

On average, they are paying some of the highest university fees in history, facing record-breaking rents and increasing interest rates, and facing a jobs market that can’t offer them enough hours to make ends meet.

Go back one generation to Millennials and an interesting comparison can be found. The same group, born smack bang in the middle of their generation, came of age at the height of the global financial crisis.

Though the GFC by no means accounts for everything Australia has experienced economically since then, its impact on Millennials is informative. And it paints a picture of how relatively short-term financial instability can impact a young generation well into the long term.

Over 40 per cent of Australian Millennials have a university degree, compared to 24.8 per cent of Gen Xers and just 12.3 per cent of Boomers before them, with many taking that debt – which was twice as much as their parents – with them into a shaky post-global financial crisis job market.

Stagnant wage growth, as well as current record-high house prices and demand, means the average age of a first-home buyer is now 36.

For Zoomers, it’s looking even worse. University fees began increasing in 2017 and by 2020, the government had increased the cost of some degrees by as much as 113 per cent, making the amount of higher education debt Gen Z will have to carry with them substantially greater than it has previously been for any other generation.

As of December 2023, Australian wage growth was at 4.2 per cent – the highest it’s been since December 2008. Substantial declines were noted in 2009, 2013, 2016, and hit a low of just 1.3 per cent growth in December 2020.

This means that not only did things get worse after they got bad, 15 years on they’re not even better – they’re simply just returning to a break even point. And while it’s true that there is greater workforce participation for Millennial women than any generation previously, which is absolutely a great thing, let’s not forget the belligerently stubborn elephant in the economic room – the gender pay gap – that means these women are earning less and trying to make it go further.

Stagnant wage growth, as well as current record-high house prices and demand, means the average age of a first-home buyer is now 36, with 54 per cent of Millennials owning their own properties and the average mortgage being eight times an annual salary.

For Boomers, 65 per cent owned a property when they were aged between 25 and 39, and the average mortgage was just three times the annual salary. If this trend continues as it is for Zoomers, the oldest of which are still nine years off reaching the age of the current first-home buyer average age, things are looking far from promising.

When you consider all of the above, it’s hardly surprising that Millennials have poorer mental health than their parents, or that Australian Zoomers are, according to the Australian Securities and Investments Commission, more concerned about finances than any other generation.

Already, six in 10 Zoomers worldwide are living paycheck to paycheck, and for a generation that experienced the height of the pandemic during their formative years and missing out on milestones across primary school, high school and university, the mental health challenges have also proven to be substantial.

Gen Zers are starring in the sequel to the horror film Millennials had to star in. While economic pain may be temporary in the grand scheme of things, the path we lay for those walking into the adult world right now is not. Just ask any Australian in their 30s how long it can stretch on for.

Victoria Devine is an award-winning retired financial adviser, best-selling author and host of Australia’s No.1 finance podcast, She’s on the Money. Victoria is also the founder and director of Zella Money.

• Advice given in this article is general in nature and not intended to influence readers’ decisions about investing or financial products. They should always seek their own professional advice that takes into account their personal circumstances before making any financial decisions.

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