The New Middle Class, and How Gen Z Fits in to it
By Kyle Morton
Much has been made over the past half decade or so about rising economic instability.
Pandemic-era fiscal policy has resulted in prolonged inflation. The cost of goods and services rose sharply, and so too did salaries for many in the professional class, though not necessarily at the same pace as inflation.
Since the pandemic, an entire sub-generation of Americans has entered the workforce and the adult world in this post-pandemic environment.
That environment was one thrown in to uncertainty by the unprecedented nature of 2020 and 2021. The pumping of money in to the economy led to sky-high inflation, which led to rapid increases in the federal funds rate.
The consensus among pundits, politicians, and banks was that the economy was headed toward certain recession. To this point, that has not materialized at all as the fed aims to pivot toward lowering rates in 2024.
After negative GDP growth in the second quarter of 2022, the U.S. has seen five straight quarters of GDP growth. Unemployment has stayed below four percent even as interest rates are the highest they've been in decades.
And yet, the perception of those newly entered in to the economy tracks more closely with the attitudes and fears of 2020 and 2021 more than the reality of 2023 and now 2024.
According to a Newsweek survey, only 41 percent of Gen Z agrees with the statement that a salary of $74,580 constitutes being middle class, a number that falls exactly in the middle of the Pew Research Center definition of the middle class.
The share that agrees with that statement of course goes up with each generation, which makes sense as each subsequent generation is by default going to view the same amount of money as representing less spending power.
The perception among Gen Z and young millenials, though, is that prior generations had a much easier time becoming homeowners and establishing comfortable lifestyles.
That is part truth and part myth. It did take less buying power to buy a home in the past, but it's not as though there was not an underclass and a lower middle class that also struggled to get by in prior decades. The hollowing out of the pension system, for example, has made comfortable retirement more of a pipe dream than it used to be.
It's easy to look at this data and these present attitudes and see a fault in our youth for unreasonably high expectations for their life outcomes, but doing so misses the bigger picture.
As industry has consolidated itself in large, expensive cities over the years, the careers that our youth have been sold on as their ticket to upward mobility have come with an increased cost of living that what is on paper a fair, middle class salary even today can not necessarily keep up with.
Union jobs in cheaper parts of the country do not exist today to the degree they did in the past, and to the extent that they do, they have been stigmatized and our students have been steered away from that path from young ages.
Instead, young professionals are, either by choice or by nature, herded in to big, expensive markets and pressured in to poor financial decisions by systems that are increasingly efficient and ruthless at extracting as much profit as possible from consumers.
Pair that with debilitating student loan debt, which is again often a poor decision that this generation has been steered to from a young age, and it's no wonder that the youngest professionals in this country feel as though they can not get by in a big market like New York City or San Francisco without going further in to debt, living with roommates, or making other sacrifices to get by that their parents and grandparents often avoided or did not have to.
Yet, it is undeniable that these people are by definition middle class earners. Perhaps it is not the salary one earns and whether it falls within a large median range that makes one feel as though they are a part of the middle class, but the reality of what that affords them.
It is undeniable that it is affording them less and less.