The Blubber

In the U.S., hourly wage growth for 16- to 24-year-olds recently surged by 13% year-on-year, compared to 6% for workers aged 25 to 54. This marks the highest "young person premium" recorded since reliable data collection began (see chart 3). In the UK, where youth pay is tracked differently, hourly wages for 18- to 21-year-olds rose an extraordinary 15% last year, significantly outpacing increases for other age groups. Similarly, in New Zealand, hourly pay for 20- to 24-year-olds climbed by 10%, compared to an average growth of 6% across the workforce.

Rising wages contribute significantly to household incomes. A recent study by Kevin Corinth of the American Enterprise Institute and Jeff Larrimore of the Federal Reserve examined generational household incomes in the U.S., accounting for taxes, government transfers, and inflation. Millennials were slightly better off than Gen X—those born between 1965 and 1980—at the same age. However, Gen Z is thriving in comparison. The typical 25-year-old Gen Z-er now enjoys an annual household income of over $40,000, which is more than 50% higher than that of baby boomers at the same age.

As we’ve reported, individuals born between 1997 and 2012 are wealthier than any prior generation at their age. Despite this, much of the narrative surrounding them emphasizes their struggles. A new and widely discussed book by social psychologist Jonathan Haidt, titled The Anxious Generation, explores this paradox.