Gen Z: grounds for optimism?
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Mike Clemence Senior Consultant
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The past few years have been tough even for someone with an optimistic bent. After the divisions of the Brexit referendum and the wide-ranging impacts of a global pandemic, the outbreak of war in Europe has strengthened a cost of living crisis that makes this winter one of the most challenging for the UK in some years. Recent Ipsos polling captures this mood: 69% of Britons feel the country is headed in the wrong direction, while just one in ten say things are going the right way (9%)1.
But when we ask people to consider what life’s going to be like for the next generation, there are glimmerings of hope. Our polling with the Economist from August 2022 suggests that whilst people are generally pessimistic about their immediate future, they are more optimistic than pessimistic for the next generation.
In fact, over the past decade, there’s been an increase in the proportion of the public believing that their children will experience a higher quality of life than they did at a similar age, shifting from 19% in 2012 to 31% in 2022. At the same time, the proportion who feel that living standards for their children will be lower has stayed roughly the same, at 25% in 2012 and 22% this year.
That being said, we remain less optimistic than the early 2000s, when four in ten expected their children would experience a higher standard of living and just one in ten disagreed, but the data suggests a recovery of sorts2.
We see a similar shift when people consider today’s youth more broadly: tentative signs of rising optimism from a low base. Four in ten Britons think that today’s youth will have had a worse life than their parents (40%), while just over a quarter (27%) think they will have a better life and slightly fewer (23%) think it will be the same.
While this is hardly a ringing endorsement of the future it is significantly better than just two years before: in December 2020, almost six in ten thought the youth of today were going to have a worse life than their parents (57%).
The next generation – Generation Z – show signs of this changed perspective too. New generational analysis conducted by Ipsos into the financial perceptions and situation of younger cohorts provides further evidence for a subtle shift in opinion, with Generation Z less likely to feel low income than the Millennial generation who preceded them.
This is clearest in the long-running British Social Attitudes Survey. One question asks participants to describe themselves as either high, medium or low income. This is an important measure of self-perception: those who consider themselves to be “low” income presumably feel the most pessimistic about their financial situation.
While it is always the case that younger people at the start of their careers are more likely than older people to feel that they are low income, we can see a small but definite attitudinal shift between the young people of yesteryear, Millennials (those born between 1980 and 1995) and today’s youngest generation, Generation Z (born 1996 to around 2012): Gen Z are less likely to put themselves in this “low” income category than Millennials were at a similar age.
Looking back to 2008, when Millennials were aged 28 and below and first featured as a cohort on this question, 63% described themselves as low income. Fast forward to 2019, the most recent year for which we have data, and we see that just over half (53%) of Generation Z say the same about themselves – despite being even younger, with the eldest members of this generation just 23 at the time. If we cast our view even further back to 1994, when Generation X were also 28 and younger, we see that 51% considered themselves low income. The similarity between Generations X and Z suggests that there is something about Millennials’ experiences in their early twenties that have had a significant impact on how this cohort perceive themselves.
What might explain this shift? The nature of work and pay have changed – there is less low-paid work now than in previous decades: ONS data revealed that in 2021 just 14.2% of jobs were low-paid, the lowest level since they started measuring in 19973. Data from the Ipsos Financial Research Survey (FRS) also suggests the distance between Gen Z and the average household income is smaller when compared with Millennials when they were younger.
However, the logic of generational analysis provides a more concrete explanation, based on the context in which these generations grew up. The Millennial generation came of age in the shadow of the 2008 economic crash and in addition to its impacts on their bottom line, this coloured how they were (and are) described: the “screwed generation” saddled with debts and with poor job prospects4, as well as the first “generation rent” locked out of the housing market5. Some of these labels have stuck with this generation6 and continue to influence how they are described, even as they begin to enter middle age and belatedly buy houses and have children (the eldest Millennials are now a positively geriatric 42).
But on the face of it, Gen Z are coming into focus in the teeth of pressures which may turn out to be just as disruptive: the COVID-19 pandemic and an economic slowdown coupled with the most inflationary environment we have seen for some decades. Yet how this generation is described focuses a great deal more on their diversity7 and liberal values8.
Even though economic prospects for young people in the UK remain middling at best, this different focus may be one of the reasons that they are less likely to see themselves as low income than Millennials at the same age. It will be impossible to unpick the extent to which this is driven by perceptions and a media narrative or by hard economic facts – clearly both are in play, which has significant implications for the life chances of the youngest generation.
Will this generation be more optimistic than previous cohorts? These results suggest a small tilt, rather than a sea change in attitudes towards the future. The change may even be relative: if people think things have hit rock bottom over the past few years, could they be more open to thinking that the only way is up? For instance, the cost of living crisis looks to be a bigger concern for younger people, who are more likely to report finding it difficult to pay their bills9.
There is also further to run – the relative optimism we hold now might be reversed by ongoing inflation, or other economic events over the coming few years – such as the historic squeeze on living standards that is predicted over the coming years10.
Whatever the drivers, already this change in public attitudes points towards a few tensions that policymakers need to be aware of as this generation ages:
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Thinking beyond the narrative will be important to avoid focussing on the “woke” elements associated with Gen Z at the expense of the real economic pressures they are also facing
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In employment we see circumstantial evidence of different demands and priorities among young employees – how might this reshape the employer-employee relationship?
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How can government policy square the relatively lower support for tax rises we see among this generation against their higher desire for redistributive policies?
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Will a less negative Gen Z become more or less likely to want to own their own home – and will a harsher economic reality put them even further from this goal than Millennials?
The next few years will be critical for Generation Z in Britain, in terms of their lived experience, how this impacts their view of themselves, and how they are viewed by others. Can this more hopeful outlook continue? And is this optimism an antidote to the temptation to treat Generation Z the same as Millennials after the 2008 crash? Or will the harsh economic situation of the cost of living crisis end up u-turning this recovery and have a more negative lasting effect on this seemingly optimistic generation?
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References
1https://www.ipsos.com/en-uk/2-3-britons-say-things-great-britain-are-heading-wrong-direction
2https://www.ipsos.com/en-uk/state-britain-survey-2003-0
4https://www.newsweek.com/are-millennials-screwed-generation-65523
5https://www.theguardian.com/society/2012/dec/09/generation-rent-locked-out-home-ownership
6https://nymag.com/intelligencer/2020/05/the-pandemic-lavishly-screwed-millennials.html
