The Gen Z Crisis

The Gen Z Crisis Rita McGrath Thought Sparks

Generation Z – born between 1997 and 2012 – are preparing for college, entering the workforce, and are at the beginning of their professional and educational careers. Throw in a global pandemic, geopolitical instability, and a recession and it’s no wonder Gen Z is struggling to find their footing.

Recession anxiety on the rise I’m not the first to report this, but concerns

of

recession

are

becoming more real by the day and Gen Z faces unprecedented financial pressures that amplify recession fear. Economic growth contracted at a rate of 0.3% in the first quarter of 2025, while consumer spending declined by nearly $30 billion in May, nearly $30 billion less in May than in April, creating tangible economic uncertainty.

Getting the job is not keeping the job The layoff anxiety among Gen Z reflects both real workplace dynamics and generational differences in job security expectations. Six in 10 employers say they have already sacked some of the Gen Z workers they hired fresh out of college in recent months, with employers citing lack of motivation or initiative, being unprofessional, unorganized, and having poor communication skills as primary reasons.

Gen Z's spending slowdown Gen Z is spending considerably less than previous generations. As Gen Z enters the workforce and steps out of their parents' homes, many are hitting a wall of economic reality - hard. This generation, raised on subsidized services, cheap direct-to-consumer (DTC) convenience, and life’s little luxuries (don’t even get me started on the family cell phone plan), is suddenly facing sticker shock - and it’s reshaping their spending, fast.

Arenas, not industries Firms looking to appeal to Gen Z in this economic climate need to think in terms of arenas, not industries. In conventional strategy analysis, industry is destiny. If you’re Whirlpool, you duke it out with other companies making washing machines. If you’re Ford, the enemy is General Motors, and so on.

Higher education and the value of a college degree In another pull-the-rug-out-from-under-us moment for Gen Z, many were told not to get into “creative” jobs that require soft skills, but instead to go for sure bets, like coding and engineering.

Well, guess what? In the age of AI, writing code can increasingly be delegated to the machines.

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