They may be young, but Generation Z has high aspirations when it comes to making money. And we’re not talking 10 or 20 years down the road—Gen Zers want to make the big bucks now. Just look at this year’s graduating class: Compared to previous years, Monster’s 2023 State of the Graduate report found that more graduates expect to earn a higher starting salary this year, despite widespread layoffs and climbing employer costs. In fact, 62% consider pay to be the most important aspect of a job, with 45% expecting their starting salary to be higher as a result of inflation and the current economic conditions.
Another survey, conducted by The Harris Poll, puts a dollar amount on Gen Z’s salary expectations. According to the survey, Gen Z says it needs an average salary of $171,633 to feel financially healthy—the highest income compared to older generations.
Keeping in mind that not every company can afford to pay a six-figure salary to entry-level employees, we took a look at the state of the labour market and how employers can attract Gen Z talent to their workforces.
Where Is All the Gen Z Talent?
While commanding a high salary, Gen Z is coming up short in terms of labour participation. Since the start of the COVID-19 pandemic, roughly half a million workers ages 20 to 24 left the workforce. Not to mention, working-age Gen Zers are more than twice as likely to be unemployed than any other generation.
“The COVID pandemic created a number of dislocations in the labour market, one of which was that it left many people in their early 20s feeling lost,” says James (J.R.) Lowry, corporate chief operating officer, career coach, and founder of PathWise.io. “They experienced the pandemic at a time in their lives when they would normally have been finding their way into adulthood. The pandemic disrupted their academic lives, their social lives, and their development. I’ve spoken to a number of young people over the past few months who are just unsure what they want to do with their lives and struggling with at least some combination of apathy, disillusionment, and depression.”
Amy Laiker, head of New York at Tiger Recruitment, says another characteristic that sets Gen Z apart is that this generation has grown up in an age where there are more possibilities to make money outside the realm of what other generations might consider “traditional work.” She says, “Factors like the rise of social media platforms, such as TikTok, the crypto space, and other newer industries have fueled a growing notion of alternative ways of making money. Essentially, they are moving toward a self-employed, gig-working generation.”
Creating a Gen Z Salary Strategy
With Gen Z talent being particularly scarce—and with salary as its top concern—employers need to find ways to appeal to this younger generation (without breaking the bank, of course). Here are a few tips for creating a salary strategy that will help attract Gen Z talent in today’s economy.
Do Some Competitive Research
Failure to pay employees, including entry-level Gen Z workers, a fair and livable wage can cost employers big time when it comes to talent acquisition and retention. In fact, 43% of new grads said they would turn down a job that doesn’t offer competitive wages. About two-thirds of all workers told us they are looking for a higher-paying job due to inflation and the high cost of living.
“All talent, regardless of the generation they belong to, should be compensated fairly for their experiences and skills,” says Dr. Kyle Elliott, MPA, CHES, founder and career coach at caffeinatedkyle.com. “Gen Z isn’t necessarily demanding higher salaries, but rather have access to salary data that has never been available to them before, and they’re using it during the interview processes, which means companies need to be ready for it. If your company is underpaying talent, Gen Z will know.”
To ensure wages are competitive, Monster’s salary tool allows employers (and job seekers) to quickly calculate average pay for the positions and markets for which they are hiring.
Include Wage Range in the Job Description
Over the past few years, pay transparency laws have come into effect in several states and cities, including New York City, Colorado, and Washington, requiring employers to disclose salary ranges for posted positions. Laiker says, “This change is perhaps indicative of the mindset of people that are moving into the workforce, namely that Gen Z are expecting transparency and employers should reflect this in their hiring strategies.”
Indeed, when it comes to recruiting Gen Z talent, including the pay range in the job description can be a good practice for employers, regardless of where they operate. In fact, many new grads (60% female, 40% male) said they wouldn’t even apply to a job that didn’t disclose salary in the job description.
“Companies only get one first impression, which means you don’t want to ruin it by being coy about salary,” Elliott says. “Talent doesn’t have the time or energy to beat around the bush around their paychecks, so consider posting the salary range in job postings, even if your state hasn’t implemented salary transparency laws.”
Discuss Salary Early in the Interview Process
Years ago, bringing up salary during the interview process was considered taboo among candidates. Gen Z, however, doesn’t want to wait to talk about what most members believe to be the most important aspect of a job. Monster’s State of the Graduate report found that about half of new grads consider an unclear salary during the interview process to be a major red flag.
“It’s important for recruiters to address salary early in the interview process to ensure that everyone knows where they stand,” Laiker says. “Rather than having a candidate attend multiple rounds of interviews only to drop out later once an unsatisfactory salary is revealed, discussing salary from the outset will ensure that time is not being wasted. It also means that more committed candidates are being put through to later interview stages. Cutting out those who are not a match for the salary being offered will streamline the entire hiring process and make it more targeted, which is exactly what Gen Z wants.”
With the average time-to-hire being around 36 days, setting salary expectations early on is a clear win-win for both employers and candidates.
Sell Them on More Than Just Pay
Sure, pay is important, but when it comes to hiring Gen Z, it’s important to keep in mind that this generation is evaluating more than just the dollar amount listed in the job offer. Monster’s State of the Graduate survey found that they are also looking for benefits like health insurance, retirement contributions, flexible work, and mental health support.
“Companies need to sell the whole package, one that includes compensation and benefits, but also includes culture, values, amenities, work environment, remote vs. in-office work, etc.,” Lowry says. “What’s evident to those of us who are older than Gen Z is that many of them care about non-financial factors, particularly with respect to topics like sustainability and social good.”