Gen Z has been known for its unorthodox opinions and lifestyle choices, but a Newsweek survey has revealed just how differently it views money compared to previous generations.
In the survey for Newsweek by Redfield & Wilton Strategies, Gen Z was by far the least likely to see $74,000 as a "middle-class salary." The poll was conducted among 1,500 eligible American voters on December 8, 2023.
Today, middle class describes a broad economic group making up roughly half of the U.S. population. Typically, it has consisted of those in white-collar jobs, small businesses or skilled trades.
According to the Pew Research Center, the middle class includes Americans making between $38,133 and $114,400 in 2023. But Gen Z isn't so sure about that definition.
Only 41 percent of Gen Z respondents said they viewed those with a salary of $74,580, which is right in the middle of the two outer ranges, as "middle class."
Older generations were more likely to see that salary as indicative of the middle class, with 50 percent, 61 percent and 73 percent of Millennials, Gen X and Baby Boomers saying the salary was, in fact, middle-class level respectively.
But what makes Gen Z so skeptical of the nearly $75,000 as middle class, which has historically been deemed an acceptable and perfectly livable income?
For Miranda Marquit, a consumer advocate and spokesperson for HireAHelper.com, it comes down to the way Gen Z has grown up around money.
"When looking at the cost of living, especially housing and higher education, many in Gen Z recognize that they need more money to live comfortably, as compared to previous generations," Marquit told Newsweek. "Much has changed from the days when Baby Boomers could work for the summer and cover their school costs. Today, Gen Z can work full-time while going to school, receive some grants, and still need to take out loans for college."
This reality means Gen Z is far more likely to doubt that $75,000 can allow you to live a comfortable middle-class life, especially if you live in a high-cost-of-living city.
Adam Hardingham, the CEO of digital marketing company Rivmedia, said Gen Z's understanding of just what "comfortable" means might look very different from their parents as well.
"To us, being middle class isn't just about material comforts like a nice house and cars," Hardingham told Newsweek. "It's more about having stability, security, and freedom. Sure, a good salary is important, but we're also looking at the big picture, things like healthcare we can afford, education without the burden of debt, and a healthier planet."
For many, that means the "American dream" their parents pursued and passed onto their children just isn't living up to reality, Hardingham said.
Inflation currently rests at 3.1 percent, and that is the economy Gen Z is largely graduating college into. And with an average student debt of $30,000 among borrowers, Gen Z is also facing soaring housing prices and uncertain job prospects, Hardingham said.
"A $74,000 income might seem good, but often it just feels like we're struggling to stay afloat in a tough financial situation," he said.
Tyler Howe, a financial adviser and the owner of Clarity Wealth Management in Grand Rapids, Michigan, echoed this sentiment. He said his Gen Z clients started their careers with far more expenses than their elders did, with everything from cell phone bills, cable costs, streaming subscriptions and rising living costs adding up.
"They also have access to far more resources for purchasing items, like Amazon, leading to more impulse purchases at any time of day," Howe said. "Therefore, an income that felt reasonable to previous generations does not feel as reasonable to them."
While other generations had years of lower expenses to save up for the rest of their lives, Gen Z hasn't had that benefit.
"Gen Z was thrown right into it, but if Gen Z isn't frugal, they are going to feel tight for a long time even more so than other generations," Howe said.
Due to this, many Gen Z and millennials have engaged in "hustle" culture, taking up side gigs instead of focusing solely on climbing up the corporate ladder.
A February 2023 global survey of 10,000 workers by Kantar found that 40 percent of Gen Z employees are working another job on the side.
In the spring of 2020, unemployment levels were at record highs for Gen Z, many of whom were graduating into a pandemic and uncertain economy. For 20- to 24-year-olds, unemployment reached 25.6 percent.
Many industries instituted widespread hiring freezes, and Gen Z-ers were often forced to fend for themselves, leading many to create their own ways of financial freedom.
"Our financial future might look different from previous generations, but it could be stronger for it," Hardingham said. "We're adapting to the gig economy, embracing remote work, and changing what success means. It's not an easy path, but we're a generation used to shaking things up."
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Uncommon Knowledge
Newsweek is committed to challenging conventional wisdom and finding connections in the search for common ground.
Newsweek is committed to challenging conventional wisdom and finding connections in the search for common ground.
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