According to Fortune, Oxford Economics has released a sobering report titled “The kids aren’t alright” that reveals Gen Z’s economic struggles are creating massive ripple effects. The hiring rate has plummeted to 3.2% – matching pandemic levels and well below historical averages – while unemployment for 16-19 year olds has hit 14%. There are now one million more young adults aged 22-28 living with parents compared to pre-pandemic trends, and this reduced spending on housing, transportation, and food is creating a $12 billion annual hole in consumption. Associate economist Grace Zwemmer notes that young workers are particularly vulnerable to economic downturns since they haven’t accumulated wealth, and current conditions are creating “long-term scarring” effects on their earning potential.
The brutal job market reality
Here’s the thing about being young in this economy – it’s basically a perfect storm of bad timing. The hiring rate has been trending down since 2022, which means even when companies aren’t firing people, they’re not exactly bringing in fresh talent either. And for Gen Z job seekers aged 13-28, that’s creating multiple barriers. You’ve got college graduates trying to enter the market, people losing temporary roles, and others getting laid off all competing for fewer opportunities.
But it’s not just about getting any job – it’s about career progression. Young workers typically benefit from what economists call “job hopping” early in their careers, moving between roles to build experience and secure higher pay. That mobility has completely stalled. So even those who do land positions aren’t seeing the wage growth or upward movement that previous generations experienced at the same age. Basically, the ladder’s been pulled up just as they’re trying to climb it.
The $12 billion ripple effect
When young people can’t get decent jobs, they don’t just sit around feeling sorry for themselves – they make practical decisions that affect the entire economy. The most obvious one? They stay living with mom and dad. We’re talking about an additional one million young adults aged 22-28 living at home compared to what we’d expect based on pre-pandemic trends.
Now, think about what happens when someone moves out of their parents’ house. They need to rent an apartment, buy furniture, pay for utilities, purchase groceries, maybe get a car or use more transportation. All that economic activity just… disappears. According to research from the New York Federal Reserve, that missing consumption adds up to $12 billion annually. That’s not just theoretical – that’s real money not flowing through the economy.
There’s some hope from millennials
Before we get too depressed, there’s actually a silver lining here from recent history. Millennials faced something remarkably similar during the Great Recession. Back then, the share of young adults living with parents jumped from 27% to 32% and stayed elevated for years. The report calls this “permanent scarring effects” from weak early career earnings.
But here’s the interesting part: despite that rough start, 55% of millennials now own their own homes even with today’s record-high prices and elevated mortgage rates. So there is a path forward, even if it takes longer than previous generations experienced. The question is whether Gen Z will eventually catch up or if this represents a more permanent shift in economic mobility.
So what happens now?
The immediate outlook isn’t exactly cheerful. Zwemmer concludes that Gen Z’s “worse perception of labor market conditions” – which, let’s be honest, seems pretty accurate based on the data – is making them more pessimistic and cautious about spending. And can you blame them? When you’re facing 14% unemployment in your age bracket and watching hiring rates sink to pandemic levels, you’re probably not rushing out to take on a car payment or sign a lease.
This isn’t just a “young people problem” either. When an entire generation delays major life purchases and economic activities, everyone feels it. Landlords have fewer tenants, car dealers sell fewer vehicles, grocery stores see lower volumes – the ripple effects touch every sector. The real question is how long this lasts and whether we’re looking at a temporary slowdown or a fundamental restructuring of how young people enter the economy.
