Generation Z is not doing well — this is the official diagnosis from Oxford Economics after an in-depth analysis of the economic prospects of this group. In fact, the stuck job market — with no hiring or firing —, expensive housing and low wage growth point to a scenario in which younger workers may face “long-term scars,” according to a study.
But Gen Z’s bleak future isn’t just affecting these young people — it’s having broader consequences for the economy as a whole. A new report from Oxford Economics reveals not only the level of activity lost because Gen Z is unable to enter the job market, but also the financial impact of still living with their parents — and, as a result, consuming less.
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The report, titled “It’s Not Going Well for Young People,” describes how $12 billion a year is lost because younger people spend less on housing, transportation and food by continuing to live in the family home.
One of the main factors determining the prospects of Generation Z is the job market, where the hiring rate has been falling since 2022 and now registers 3.2%, well below the historical average and similar to the period of the covid pandemic.
“For young workers, the state of the job market is the most important piece of the puzzle in determining overall economic health, as these individuals have not yet had the opportunity to accumulate wealth,” writes associate economist Grace Zwemmer.
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“Young workers are more vulnerable to recessions, and a weak labor market can have a lasting negative impact on wage growth and earning potential.”
Gen Z candidates — currently ages 13 to 28 — face multiple barriers to getting a job. With hiring falling, unemployment is growing especially quickly among the least experienced: the unemployment rate among young people aged 16 to 24 is well above the national average.
While the general US index is around 4% (three-month moving average), those between 16 and 19 face 14%, and those between 19 and 24 are at around 9%, according to data from Oxford.
When analyzing the reasons for Gen Z unemployment in 2025, three main categories emerge: recent graduates trying to enter the market, young people who have lost temporary jobs, and those who have been laid off. “When labor market conditions worsen, young people are often the first to be laid off,” adds Zwemmer.
Additionally, a tight market means that even those who get a job can’t jump from one company to another to increase income and experience.
“Typically, young workers benefit from above-average salary growth at the beginning of their career, as quickly learning new skills helps with promotions, and greater mobility allows them to change employers to obtain more significant increases in less time”, explained the economist.
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“But that’s not happening this cycle. On the contrary: upward mobility has stalled, and wage growth has fallen hardest among workers ages 16 to 24.”
Fragile foundations
This difficulty in entering or progressing in the market makes Generation Z behave differently than previous generations at the same age. Without stable employment, many do not have the financial means to leave their parents’ house and start paying rent, bills and groceries.
“We estimate that there are 1 million more young adults between the ages of 22 and 28 living with their parents than before the pandemic,” Zwemmer said, adding that data from the New York Federal Reserve suggests this reduction in consumption is equivalent to $12 billion.
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For those who hope for future independence, there is some encouragement: millennials went through something similar. According to the study, during the Great Recession, the proportion of 22- to 28-year-olds living with their parents rose from 27% to 32% and remained high for years — “a sign of the permanent effects of low early-career wages and tighter credit conditions.”
Still, by 2025, 55% of millennials will own their homes — even with record prices and high interest rates maintained by Federal Reserve policy.
But until there is some relief in the market, Gen Z’s concern is understandable.
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“A worse perception of working conditions — which for young adults is the main determinant of financial well-being — is making this generation more pessimistic and could make them more cautious about consumption,” concluded Zwemmer.
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