Gen Z Makes Less Millennials Did at the Same Age

Gen Z is making less than millennials made a decade ago at the same age.

As of the fourth quarter of 2023, Gen Zs aged 22 to 24 were making an average of $45,493. At that same age 10 years ago, adjusted for inflation, millennials were making $51,825, according to a recent study by TransUnion. And the debt-to-income ratio is 4 percentage points higher for Gen Z than millennials, coming in at 16.05% compared with 11.76%, the credit bureau found.

TransUnion attributes this to the fact that Gen Z, which is defined as the generation born between 1995 and 2012, has come of age during a high inflation economy, which has seen a 32% rise in cumulative inflation since 2013.

Inflation peaked in June 2022, when the consumer price index shot up 9.1% year-over-year, its fastest rate of increase in 41 years — just as a sizable portion of Gen Z began entering the job market. And inflation has remained stubbornly high despite the Federal Reserve’s quantitative tightening campaign, with consumer prices excluding food and energy climbing at a 4.5% annualized pace in the first quarter of 2024 — up from 3.3% in the prior quarter.

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And these pressures showed in TransUnion’s interviews with Gen Z: 14% of Gen Z respondents said they were “extremely stressed out” about their financial situation, compared with 8% of millennials a decade ago. That’s almost the exact opposite of those who felt “extremely confident” in their finances, with 8% of Gen Z saying so now and 13% of millennials in 2013.

Americans remain downbeat about the economy. The University of Michigan Survey of Consumers, a highly-watched index of consumer sentiment, plunged 13% in May — its lowest reading in six months and a sign that inflation is once again weighing on consumers.

Credit cards are a favorite for Gen Z

To fill some of these financial gaps, the youngest generation is relying more on credit cards than their millennial counterparts at their age, the report also found.

According to TransUnion, 84 % of 22-24 year olds had at least one general-purpose credit card during the fourth quarter of 2023, compared with just 61% of 22-24 year olds in the same quarter a decade earlier.

More than one-third of Gen Z respondents ranked credit cards as the most useful credit product, up from 29% of millennials in 2013.

“It’s no surprise that in this economic climate, one in which the cost of living is significantly higher relative to a decade ago, younger consumers are increasingly turning to credit products to bridge their financial needs,” said Jason Laky, executive vice president and head of financial services at TransUnion. “This is a demographic that is younger and newer to the workforce and accordingly, is likely commanding a lower salary at an earlier point in their career. As long as inflation remains elevated and the cost of goods remains so as well, balances across products such as credit cards, personal loans, and auto are likely to continue to grow.”

TransUnion in February surveyed 614 Gen Z consumers between the ages of 22 and 24, and 623 millennials, who were that age 10 years ago. Millennials are defined as those born between 1980 and 1994.

This article originally appeared on Quartz.