The Most Educated, Yet Most Underemployed: Gen Z’s Economic Revolution

ccording to data from the Bank of America Institute, Generation Z (Gen Z, born 1997–2012) is emerging as a transformative economic force. Aged 12–28, this cohort is set to reshape global markets with their growing income, unique spending habits, and value-driven mindset.

As they step into adulthood, here’s why Gen Z is a generation to watch.

The Largest Cohort with Skyrocketing IncomeOver the next decade, Gen Z is projected to account for ~30% of the global population, making them the largest demographic group.

Their economic influence is surging: in 2023, their global income was $9 trillion, expected to reach $36 trillion in five years and soar to $74 trillion by 2040. In the U.S., median household income for 18–24-year-olds jumped 125% from 2016 to 2023, outpacing other generations.

Spenders, Not Savers?

Gen Z’s global spending is forecasted to hit $12.6 trillion by 2030, up from $2.7 trillion in 2024, with growth outstripping the average consumer. They’re splurging on experiences—air travel spending rose 35% year-over-year in 2023—and dining, reflecting a shift away from material goods.

From embracing plant-based diets to cutting back on alcohol, Gen Z is redefining U.S. consumer trends, disrupting industries and social norms.

Overeducated and Underemployed

Gen Z is the most educated generation yet, with 57% of 18–21-year-olds (no longer in high school) enrolled in college in 2022, compared to 52% of Millennials in 2003 and 43% of Gen X in 1987.

This education fuels earning potential, with wage growth for employed Gen Z up nearly 8% year-over-year in February 2024—almost double the median across generations, per Bank of America deposit data. However, many face underemployment as first-time job seekers, navigating a competitive labor market.

Diversity and Values Driving Economic Choices

As the most diverse generation, with 48% of U.S. Gen Z identifying as non-white, their cultural and social perspectives shape their spending. They prioritize brands that champion sustainability, diversity, and social justice, often researching a company’s values before purchasing.

For instance, 60% of Gen Z consumers prefer eco-friendly products, and they’re willing to pay a premium for brands that support racial equity or ethical practices.

This value-driven approach extends to their digital habits: 75% use mobile payment apps like Venmo or Zelle, far outpacing older generations.

Their fluency in digital platforms—from e-commerce to social media marketplaces—makes them a powerhouse in the digital economy, influencing trends and driving innovation in fintech and online retail.

Businesses that fail to align with Gen Z’s ethical and digital expectations risk losing their loyalty as this generation’s purchasing power grows.

Challenges and Opportunities

Amid Economic HeadwindsDespite their optimism, Gen Z faces significant hurdles. High living costs, skyrocketing rents, and student debt burden many, with 30% of 18–24-year-olds living with parents to save money.

The average student loan debt for Gen Z borrowers is around $30,000, creating financial strain. Yet, their resilience shines through. Forty percent of 18–24-year-olds are investing in stocks or cryptocurrencies, a higher share than Millennials at the same age. Many are also turning to side hustles—freelancing, content creation, or gig work—to supplement income.

This entrepreneurial spirit, coupled with their financial literacy (60% feel confident in their financial knowledge), positions Gen Z to navigate challenges creatively.

Programs like financial education apps and online investment platforms are empowering them to build wealth despite economic pressures, signaling a generation that’s both pragmatic and forward-thinking.

The Future is Now: A Call to Action for Businesses

Gen Z’s rising income, spending power, and values are already reshaping markets, and their influence will only grow.

Their $12.6 trillion spending projection by 2030 demands attention from businesses, which must adapt to Gen Z’s digital-first, experience-driven, and socially conscious preferences.