Salary Expectations: What Gen Z & Millennials Want From Their Employers
When it comes to the salary expectations of the younger generations of workers, Gen Z holds employers to a slightly higher standard. A recent GOBankingRates survey asked over 1,000 Americans about their minimum salary needed to be happy, and the majority of Gen Z adults said they would need to make between $80,0001 and $100,000. Meanwhile, the majority of millennials said they would need to make between $60,001 and $80,000 to be happy.
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What Salary Does Gen Z Need To Be Happy?
Although the largest percentage of Gen Z adults (22%) said they would need to make between $80,0001 and $100,000 to be happy, just a slightly lower portion of this age group said they would be happy making between $40,000 and $60,000 (20%) and $60,001 to $80,000 (20%). An additional 16% said they would need to make between $100,001 and $150,000. Only about 1 in 5 Gen Zers said they would need to make over $150,000 to be happy.
Fergus Hodgson, economic columnist and founder and director of Econ Americas, was surprised that the majority of Gen Z would be happy making $100,000 or less.
“I am slightly surprised with the low expectations, but these individuals are early in their careers and likely placing more importance on experiences and exploring vocational options,” he said. “The weight of family expenses has yet to hit them. Further, my guess is they are considering roles with many fringe benefits over and above explicit salaries.”
That said, Gen Z does actually have higher expectations than their older counterparts. Danetha Doe, an economist and spokesperson for Clever Real Estate, believes that because of inflation and the current cost of living, desiring a higher salary is not unreasonable.
“Salary expectations are increasing to match the rise in the cost of living,” she said. “Another reason could be the psychological impact of the pandemic. For some folks, the pandemic revealed the desire to work less and enjoy life more. In some cases, this means an individual will need a higher salary.”
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What Salary Do Millennials Need To Be Happy?
The survey found that there were some slight differences between the salary preferences of younger and older millennials, though the majority of both (25%, respectively) said they would need to make between $60,001 and $80,000 to be happy.
For younger millennials, just slightly fewer (24%) said they would be happy making $40,000 to $60,000. About one-fifth would be happy making between $80,001 and $100,000, and 17% said they would need to make between $100,001 and $150,000.
For older millennials, 23% said they would be happy making $40,000 to $60,001, but there are more that said they would need to make between $100,001 and $150,000 (20%) than said they would be happy making between $80,0001 and $100,000 (16%).
One reason that millennials may have lower salary requirements to be happy than Gen Z is that they have been in the working world for longer, and may have realized that how much money you make isn’t necessarily the most important aspect of a job.
“Part of the Great Resignation may be that people are trying to find the right job, which is more than salary,” said Jay Zigmont, Ph.D., CFP, founder of Childfree Wealth. “Much of the reporting in the study may be more a reflection of what they currently make and if they are happy, rather than a ‘magic number’ that will make them happy.”
On the flip side, Andre Jean-Pierre, investment advisor and managing director at Aces Advisors Wealth Management, said that millennials often underestimate how much money they need to make to be financially able to hit their desired life milestones, and may be shooting too low for what their desired salary should be.
“I believe this is an example of not knowing what you do not know due to a lack of formal education,” he said. “Although millennials in the U.S. are less interested in expensive life milestones such as home ownership, marriage and having multiple children, many still underestimate the price of fully ‘adulting.'”
Jean-Pierre said that his millennial clients typically underestimate the cost of retirement, higher education and homeownership.
“These are the three most expensive purchases most people ever make, and inflation is only making the price go up,” he said. “You can get a loan to buy a house and to go to school, but no one is loaning out money so you can retire. That realization, along with the pure sticker shock of seeing the retirement amount [most people need], coupled with the strong possibility that Social Security will not exist in the way that it does today is usually a sobering realization. So the low salary happiness assumptions go hand-in-hand with the lack of knowing what they are on the hook for throughout their life cycle.”
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