Introduction

In recent decades, many young adults have found themselves struggling financially in ways that previous generations did not. This has led to widespread sentiment among Millennials and Generation Z that they are poorer and less economically secure than their parents, even though global economic output, technology, and educational levels have risen. Understanding this paradox requires looking beyond surface notions of progress to structural economic shifts that have reshaped opportunities for wealth accumulation, financial stability, and life milestones.

Stagnant Wages and Rising Living Costs

One key driver of this generational financial gap is stagnant wage growth relative to rising living costs. While young people today are more likely than their parents’ generation to earn a college degree, real wages (wages adjusted for inflation) have barely increased over recent decades in many high-income countries, leaving young workers with limited spending power. This dynamic means that even if today’s young adults earn higher nominal salaries, their income often buys less than it did for previous generations at the same age.

Housing, Wealth Inequality, and Financial Independence

Simultaneously, fundamental economic milestones that previously signalled upward mobility, such as homeownership and financial independence, have become much harder to achieve. Surveys show most young adults find saving and homeownership harder than parents, as housing prices and rents outpace income growth. Home equity is harder to build; wealth transfers favor older generations, shaping financial security today.

Education Costs, Student Debt, and Rising Essentials

Rising student debt and education costs worsen young people’s financial challenges, delaying homeownership, family plans, and retirement savings. These issues reflect systemic funding shifts, not individual choices. Simultaneously, essential expenses like food, transport, and healthcare are increasing faster than wages, as seen in South Africa, where groceries and transport consume more income than for previous generations. Combined, high debt and rising living costs reduce disposable income, limit savings and investment opportunities, and undermine both real and perceived financial progress for younger adults.

Precarious Work and Declining Intergenerational Mobility

The perception of being economically worse off is also rooted in shifting labour markets and economic instability. Young workers today face more precarious employment conditions, with gig economy roles and temporary contracts becoming more common. These jobs often offer lower benefits and fewer protections than the full-time jobs that were more prevalent during the early careers of older generations. The result is a generational shift in economic prospects: studies find that the proportion of adults expected to earn more than their parents has declined substantially, reflecting reduced intergenerational mobility in income and wealth accumulation. Despite tech advances and education gains, costs, stagnant wages, and wealth barriers make youths feel poorer than their parents; progress fails to improve wellbeing.

Conclusion

Young people feel poorer due to structural economic shifts. Stagnant wages, high living costs, insecure work, and debt hinder progress, unlike past generations’ stable jobs, affordable housing, and accessible education.