Gen Z Earns More Than Millennials But Prefers Living at Home

Gen Z workers are earning more than their millennial predecessors but are increasingly opting to live at home rather than face high rents or mortgage payments, according to new research. The analysis shows that individuals born between 1996 and 2000 have living standards that are, on average, 15 percent, or approximately $5,000 USD (converted from £3,700), higher than those born a decade earlier. This improvement is partly attributed to their continued residence in their parents' homes.

The Resolution Foundation report found that 63 percent of 20- to 24-year-olds now live with their parents, an increase from 51 percent 15 years ago. This trend extends to older young adults, with 24 percent of those aged 25 to 29 still residing in the family home, up from 19 percent in 2011. The report characterizes Gen Z as "the stay-at-home generation."

Housing Affordability Challenges

The increased popularity of residing with parents, termed "Hotel Mum and Dad," is driven by the inaccessibility of other housing options, characterized by "impracticably high rents and house prices." The proportion of young adults privately renting has declined, and they are less likely to own homes compared to previous generations born in the 1980s and 1990s. Despite potentially saving more by living at home, evidence suggests many still rely on financial assistance from their parents, the "Bank of Mum and Dad," to enter the housing market. Approximately one-third of first-time buyers received parental help last year, a figure that has risen by about 20 percentage points over the past two decades.

Economic Factors and Future Outlook

Gen Z's comparatively better financial standing is partly due to millennials coming of age in the aftermath of the late 2000s financial crisis. Additionally, recent significant increases in the minimum wage have benefited lower-earning young workers. However, the report cautions that younger generations, born from 2001 onwards, may be on a lower income trajectory than those born just a few years prior. The situation is more concerning for those unable to secure employment, as youth unemployment has surged. The number of individuals aged 16 to 24 classified as not in employment, education, or training (NEETs) has recently surpassed one million. "The UK's growing NEETs crisis casts an ominous shadow over recent progress on incomes," the report stated. Lalitha Try, Economist at the Resolution Foundation, noted that while Gen Z has a living standards boost due to higher earnings, the high cost of housing is the primary driver for their continued reliance on parental homes.