Gen Z is set to take over the economy in a decade, despite potentially losing $10 trillion in earnings because of the pandemic

Gen Z will surpass millennials in income in 2031, according to a Bank of America Research report. Roy Rochlin/Getty Images
  • Gen Z is set to take over the economy in the next decade, according to a Bank of America Research report called “OK Zoomer: Gen Z Primer.”
  • By 2030, Gen Z‘s income will reach $US33 trillion and surpass that of millennials in 2031.
  • That’s despite a possible $US10 trillion loss in lifecycle earnings for Gen Z due to the pandemic.
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In a little over a decade, Gen Z will be taking over the economy.

Gen Z currently earns $US7 trillion across its 2.5 billion-person cohort, according to a Bank of America Research primer on the generation, called “OK Zoomer.” By 2025, that income will grow to $US17 trillion, and by 2030, it will reach $US33 trillion, representing 27% of the world’s income and surpassing that of millennials the following year.

The report defines Gen Z as those born between 1996 and 2016. The oldest of Gen Z turn 23 in 2020, and the oldest millennials turn 39 this year. The youngest generation has the fastest-growing income, per the report, led by the US, closely followed by China.

This earnings growth is short of what it would be without the pandemic, of course. Gen Z students could lose $US10 trillion of lifecycle earnings due to Covid lockdowns, the World Bank has estimated.

Repeating millennials’ rocky career paths

American Gen Zers and millennials have been financially hardest hit in the coronavirus recession, suffering from unemployment rates greater than those during the peak of the Great Recession. But Gen Z is repeating the same rocky start to their careers as the oldest millennials: graduating into a recession.

Stanford research shows that recession graduates typically see stagnant wages, lasting for up to 15 years. The author behind this research, Hannes Schwandt, assistant professor at Northwestern University’s School of Education and Social Policy, previously told Business Insider that this the delay in wealth accumulation isn’t necessarily due to lack of jobs, but that recession graduates typically start at “lower quality” jobs.

A potential upside to this, Schwandt said, is that graduates job-hop to play financial catch-up, which can make them more flexible and help advance their career.

“Over time, what you see in these cohorts is a higher degree of mobility from one employer to the next,” Schwandt said. “It helps them climb up the quality ladder.”

Gen Z may want to look to millennials for an idea of what’s to come, as the so-called “job-hopping generation” graduated into the 2008 financial crisis, then entered the 2020 recession before their oldest members turned 40 years old. Now, before the economy has even recovered from the effects of the pandemic, millennials have just another decade left as the major driving force of the economy.