This article is adapted from a lecture presented at the Mises Student Circle “Why the Economy Is Failing Generation Z” on November 1, 2025, in Grand Rapids, Michigan.
I teach at Ferris State University and most of my students are members of Generation Z. When I ask them what they are stressed about, they often mention passing my course, of course—but beyond that, it seems that they are stressed about dismal economic prospects regarding jobs and housing. In many cases, this concern is understandable. They face serious challenges.
Inflation is hollowing out the middle class and making life more difficult for Gen Z. However, in some cases, the situation is overstated—especially when compared to other historical periods. There are many stories about how easy things were for high school and college graduates 50 or 60 years ago. However, the economic reality then was not always as favorable as it is sometimes portrayed.
One useful economic statistic is the ratio of job openings to unemployment. When job openings are high relative to unemployment, that is a strong labor market. Right now, we are still in that favorable range. Unemployment is relatively low—assuming the official statistics are accurate. Of course, it is possible that inflation and unemployment are understated for political reasons.
Federal Reserve Chair Jerome Powell has acknowledged that while the job market is currently relatively strong, the situation could worsen, which is why he claims interest rate cuts may be necessary to avoid a downturn in the labor market. Of course, those who understand Austrian business cycle theory know that such Federal Reserve actions will exacerbate macroeconomic problems in the long run.
The job market is somewhat tight, but it has been tight before. I lived through the stagflation of the 1970s and early 1980s, when unemployment and inflation were much higher than today. In fact I borrowed money at around a 20% interest rate. I am not saying conditions are ideal for Gen Z, only that we need to be careful and accurate in comparing today’s economic realities with those of the past.
Another Gen Z complaint is the difficulty of purchasing a home. But homeownership is actually higher today than it was 50 or 60 years ago, though not as high as it was in 2005. Homeownership rose from 1995 to 2005 when loans were widely given to people without stable employment, collapsed starting around 2005, and has since recovered. Compared to the 1960s and the 1980s, however, homeownership rates are slightly higher today. I realize of course that the fact that homeownership is relatively high does not imply that it’s easy for Gen Z members to purchase a home.
Median home prices, adjusted for inflation, are much higher today than decades ago, but homes are also much larger and much nicer. In some cases, it is now illegal to build the small, low-quality homes that were common decades ago. And the median house size has increased by about 65% over the last 60 years. When comparing housing prices over time, it is important to adjust the numbers for inflation and home quality.
Families used to raise six children in a threebedroom, one-bathroom home. In my own family, we had five children and one bathroom in a very small house. By the 1970s, we had moved into a home with one and threequarter bathrooms. Appliances were poor or nonexistent—no dishwashers, microwaves, or modern conveniences. These differences matter when making comparisons.
After college, I was able to afford the cheapest possible condominium in Denver. Adjusted for inflation, the principal and interest on that small condo were higher than what I paid on my current relatively large house in Michigan. Of course, most of the reason for my high payment on the condominium was the high interest rates due to Federal Reserve policies. My point is simply that Gen Z should be cautious about broad claims about housing prices.
In addition to inflation and building regulations driving up housing prices, younger buyers today, to a large degree, don’t demand the lousy homes of the past. They want the houses of today.
Some students also complain about car prices. Government mandates have driven up the cost of vehicles beyond inflation by requiring extensive safety and technology features. Once again, Gen Z should be blaming government intervention for many of their economic concerns.
Government mandates do make cars less affordable. However, cars today last longer and perform better in many cases. The same is true of appliances. I remember our first microwave. It cost $100 and barely worked. Today, a $60 microwave is vastly superior. These gains are the result of market innovation and should be acknowledged. Yes, inflation and government interventions make life harder. But entrepreneurs deserve credit for the technological improvements we enjoy. We should always remember to praise the entrepreneurial spirit that allows us to have a high standard of living.
In the 1970s, many families simply could not afford to send students to college, and many people did not even finish high school. Today access to college has expanded dramatically. Of course, tuition has risen much faster than inflation because higher education is a large governmentrun bureaucracy. Higher education operates as a cartel. New programs must resemble existing ones, preventing meaningful competition. At Ferris State, it took years of paperwork and approvals to establish an economics program, and there were even objections from competing universities.
In addition to the fact that higher education is not a competitive market, universities over time have added layers of bureaucracy, driving up tuition prices. Decades ago, most tuition went to the classroom, to faculty and to classroom buildings. Today, there are multiple levels of bureaucrats and administrators and departments that are not directly devoted to classroom instruction that were absent in the past. So of course students today are going to pay much higher tuition rates than my generation paid.
There is some good news. Household spending on food, clothing, and housing as a percentage of income has slightly declined since the 1960s and 1970s. Discretionary income has increased. People eat out more and spend more on entertainment. It is not all doom and gloom.
Another issue to mention is the Gen Z work ethic. Professors have made the point that some Gen Z students struggle more than previous generations with focus and meeting deadlines. I see that this change has occurred with some of my students. Gen Z students, at least some of them, have dismal job prospects because of their behavior.
Some Gen Z students do not want to work 40 hours a week due to work-life balance concerns. When I was younger, I worked 70 hours, sometimes more, a week in the oil field to afford housing. If I had taken a high school teaching job at that time I would have had lots of time off, but I would not have been able to buy property. Work-life balance was not something we worried about.
Some argue that political stress, Supreme Court decisions, terrorism, or climate change make it difficult for Gen Z to function at work. They also claim jobs are not fulfilling. A book that captures this perspective is Bullshit Jobs, written by a baby boomer but applicable to Gen Z. The argument is that many private-sector jobs lack meaning, which leads to disengagement.
This book places most of the blame for these jobs on business owners, managers, and entrepreneurs rather than government, although it does briefly acknowledge the government’s role in creating bullshit jobs. It even argues that someone can be content in a job that is objectively unfulfilling without realizing it. You could be stuck in a bullshit job without even knowing it.
Gen Z should reject this mindset.
Gen Z does have legitimate complaints. But many do not blame government policy, instead blaming baby boomers—of which I am one. There is some legitimacy to that claim. A book titled A Generation of Sociopaths: How the Baby Boomers Betrayed America argues this point. Much of the book actually critiques government policy, though it often places responsibility on the boomer generation rather than the state itself. Indirectly, previous generations are responsible for some of the Gen Z difficulties because they have supported increasing amounts of government intervention in our family and business decisions.
The book also blames “neoliberalism”—defined as free markets, free trade, and deregulation— an idea that is largely a myth. One of the basic fallacies of this book is this myth that we’ve seen a flowering of economic freedom in the past few decades. One chapter even blames disco, indirectly, for neoliberalism. The point of the chapter is that the disco era, the 1970s, led to cultural changes that resulted in the rise of neoliberalism, and that neoliberalism is the cause of many of today’s economic uncertainties.
More serious chapters in Generation of Sociopaths correctly focus on government debt and long-term economic growth. Slower economic growth is a major reason it is harder for younger generations to succeed today. Austrian economists explain this clearly: Government intervention leads to a misallocation of resources, reducing growth. In free markets, consumers guide production and resources are allocated efficiently. When resources are allocated by bureaucratic mandates, inefficiency results. Ludwig von Mises brilliantly explained this in his 1944 book Bureaucracy. Increasing the state’s control over economic activities will reduce economic growth.
Another legitimate Gen Z complaint is high prices. Inflation is extraordinarily harmful for those living on wages and salaries. Inflation reduces the purchasing power of workers’ takehome pay. However, it does benefit some people. The prices of assets such as real estate and stocks tend to increase faster than inflation, at least until economic downturns result in corrections of these prices. So inflation benefits those with assets while destroying the wages and savings of the middle and lower classes. It transfers wealth from workers to the financial sector.
Also, as Austrian theorists have explained, monetary expansion benefits those who receive the money first—banks and the government, for the most part—at the expense of everyone else. Again, it’s a wealth transfer to the financial sector of the economy.
So the root cause of the Gen Z economic problems is the expansion of our federal government.
Nominal federal spending in 2006, not adjusting for inflation, was 815 times higher than it was in 1930. Of course, that is an unfair comparison. In that time period, due to Federal Reserve monetary expansion, there was over 1,100% inflation. But adjusting for inflation and population changes, federal government spending was still 27 times higher in 2006 than in 1930.
And the expansion of the federal government has continued in the past 20 years. Government spending has nearly tripled since 2006, not adjusting for inflation. The burden of government expansion will fall on younger generations.
In short, to a large degree, Gen Z has gloomy economic prospects due to government policies, monetary expansion, and the increasing burden of government regulations.
What should younger generations do about their economic difficulties?
First, learn economics—real economics. These are eternal truths about God’s creation. Learn logic, math, and of course economics. Unlike other disciplines, correct economics does not change with trends. It helps you understand the world, predict outcomes, and make better decisions. Read the great Austrian economists. Study Ludwig von Mises and Murray Rothbard thoroughly. Understanding these truths about the world will help you deal with the issues you face.
Second, join the fight for liberty. Murray Rothbard called students to join the intellectual fight for liberty and against socialism, Marxism, Keynesianism, and centralized power in general. He believed that liberty might lose in the short run but truth wins in the long run—and that making the case for liberty is worth doing, even when it is difficult.
If you have not joined the cause for liberty yet, I encourage you to do so.
