Gen Z is often criticized in the media for a lack of work ethic and company loyalty. Early-career job hopping is mischaracterized as a sense of entitlement, with some outlets accusing Gen Z workers as wanting to skip the first few rings of the corporate ladder out of boredom or for a quick salary grab.
It’s true that Gen Z workers do spend less time at entry level jobs than people have in the past. 83% of Americans in this generation self-identify as job-hoppers, according to ResumeLab. In the same study, 66% of respondents said they plan to stay at their current job for just two years or less.
But the driving forces behind this movement can’t solely be blamed on the employees themselves. Both the economy and the job market are much less stable than they have been in the past, causing younger workers to find different ways to navigate these unique challenges.
Here are four challenges facing Gen Z that impact their career decisions in today’s job market.
Stagnant Salary Growth
The economic reality for Gen Z is that wages are on a downward trend in many job sectors. Nearly half of employers surveyed by ZipRecruiter responded that they have lowered salaries for some positions in the last year. But even with these budget cuts, more than 40% of employers have seen job vacancies go unfulfilled because they couldn’t meet candidate wage expectations.
But despite these corporate decisions, money is an important factor to Gen Z. We’ll dive more into the economic pressures causing that motivation, but the issue with stagnant salaries impacting Gen Z job selection is real. For instance, 68% of Gen Z workers say they would take a job they didn’t like if it paid more.
Another frustrating component for Gen Z is their own salary stagnation set on the backdrop of extreme growth in CEO pay. According to the Economic Policy Institute, CEO pay has increased 1,209% since 1978, while the average worker’s pay has increased just 15.3% in the same period. So while some older generations focus on the supposed entitlement of Gen Z workers, today’s world is one with immense economic disparities that didn’t exist as significantly for older generations.
Higher Cost of Living
Part of the issue with stagnant wages is the ongoing battle against inflation. The first quarter of 2024 saw a 4.4% increase in the Personal Consumption Expenditures (PCE) Index, which is well over the Federal Reserve’s 2% target inflation rate.
While that may not seem like a huge jump, it’s important to remember that prices have been increasing significantly since 2020. When including energy and food, overall prices have increased 20% in the last four years.
This hits younger generations harder, who have less disposable income to rely on. In fact, a Bank of America Institute study revealed that Gen Z spending declined 2% in 2023, while Boomer spending increased 2.5%.
Staying in the same job simply doesn’t offer the same salary growth as moving to a new position. People staying in the same job saw the greatest wage losses between 2019 and 2022, according to the Federal Reserve Bank of Atlanta. Those who switched jobs saw a median nominal wage growth of 7.5% in 2022, compared to just 5.5% of those who stayed in the same job. In other words, the best way to counteract inflationary pressure is to move companies – a strategy that Gen Z has found to work.
Retirement Funding
In addition to worrying about today’s living expenses, Gen Z members also have different retirement concerns to think about than older generations. In the 1980s, 60% of workers had pensions available, while only 14% of today’s American workers have access to these employer-paid retirement benefits.
Paired with an uncertain future for Social Security benefits, the responsibility of retirement planning falls primarily on individuals.
Gen Z is taking this concern seriously. When surveyed about their motivation for focusing on higher paying jobs, the majority of Gen Z workers wanted more money in order to pay bills and save. Only 10% wanted a raise in order to “splurge.”
This sentiment translates into financial action as well: Gen Z has 2.5 times more assets in their defined contribution plans compared to their Gen X counterparts at the same age. Clearly, rather than job-hopping as a sense of entitlement, it’s really an economic necessity for this generation.
Lower Confidence in Job Security
Another economic factor spurring on career changes for Gen Z is a lack of job security across industries in recent years. Job performance alone isn’t enough to guarantee your position. Since the beginning of 2023, nearly 5,500 companies in the U.S. have implemented mass layoffs, which is when a significant portion of a company's workforce is laid off in a 30-day period.
And large-scale layoffs aren’t limited to a single industry: companies in tech, media, auto, and retail have all made it on the list of layoffs in early 2024 alone.
It’s no surprise, then, that Gen Z workers are prone to frequently look for a better role when there’s no guarantee of a position in any industry.
Gen Z as Job Trend Setters
Despite the bad rap some outlets give Gen Z for their job-hopping tendencies, the future of the workplace is already recognizing many of the strengths and attributes that come with courting this generation of employees.
As the population of Gen Z workers continues to grow, the quality of the work environment is likely to change too, with a higher need for attractive compensation and benefits as well as professional development opportunities to attract and retain this generation of employees.