Millennial and Gen Z workers plagued with cost of living fears as wages struggle to keep pace with inflation

Right now, the greatest concern for younger generations isn’t the geopolitical events, COVID-19, or even climate change. 

It’s simply getting by. Over a third of millennials (born between January 1983 and December 1994) and 29% of Gen Z (those born between January 1995 and December 2003) report that the cost of living is their biggest concern these days, according to Deloitte’s 2022 Gen Z and Millennial Survey released Wednesday. The report is based on a survey of 14,808 Gen Z and 8,412 millennial responses across 46 countries.

Although seemingly ever-increasing living expenses are top-of-mind these days thanks to record-breaking inflation, financial anxiety is not a new phenomenon among millennials—or Gen Zers.

“Everyone is experiencing rising inflation, everyone has seen what supply chain constraints are doing, but these generations have been having these concerns over the last few years,” says Michele Parmelee, Deloitte’s global deputy CEO and chief people and purpose officer. 

In the U.S., the average hourly wage for non-farm employees was $31.85 in April. And while that's an increase of 5.5% over the past year, it hasn't kept up with inflation, which saw a year-over-year increase of 8.3% in April. With personal savings rates back to pre-pandemic levels and government stimulus programs long gone, it means many Americans once again don't have money left over at the end of the month.

In fact, nearly half of Gen Z and millennials say they live paycheck to paycheck, according to Deloitte's report. Overall, roughly three in 10 members of these two younger generations feel they lack financial security. And they're not just worried about scraping by this month, their future finances loom large as well. About 31% of millennials and 26% of Gen Z believe they won’t be able to retire comfortably.

In addition to their personal finances, these younger generations are also concerned with wider economic inequality. Roughly three-quarters of Gen Zers and millennials believe the wealth gaps in their respective countries are widening. And they don't see any end in sight. Only about 28% of younger workers believe the current economic situation in their country will improve over the next year.

But these generations are also doing their best to improve their situations. Nearly half of Gen Z and a third of millennials have picked up a second job or side hustle. A small, but growing percentage of these younger workers—13% of Gen Z and 15% of millennials—are also moving to less expensive cities with remote jobs.

In fact, the lure of hybrid and remote jobs is in no small part related to the financial benefits. Nearly 40% of millennials and a third of Gen Zers report remote work has helped them save money.

“The commuting costs—and all the other costs associated with showing up in-person—is another driver for why they want more flexibility,” Parmelee says. “They very much want more of a hybrid work setting and even more than that, just greater flexibility about when and where [they work].”

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