The Age Tax: Unjustified Costs for Gen Z and Boomer Drivers Make Big Impacts Where Minimum Wage is Low

Ben Guess
· 4 min read
Many Boomers are still behind the wheel, but they’re paying more for car insurance.
Key Insights:
  • In 17 states, Gen Z drivers pay higher car insurance premiums than Millennials despite having equal or fewer frequencies of driving violations. These states aren’t bound to any region, indicating that age is the deciding factor in premium cost here.
  • At the federal minimum wage, a Gen Z driver has to work eight hours more than Millennials per month to pay their car insurance premium.
  • Boomers also pay more than Gen X for premiums in 11 states. However, these states are primarily located in the eastern U.S., where monthly premiums tend to be more expensive anyway.
  • While Boomers have the wealth to supplement their higher premiums, Gen Z drivers don’t, and are at a high risk of being saddled with significant debt.
Gen Z drivers often pay higher insurance premiums than older drivers, since the risk of motor vehicle crashes is
for teen drivers than any other age group according to the CDC, and since younger drivers are believed to be riskier. But new data from
shows that Gen Z drivers have equal or lower frequencies of driving violations when compared to Millennials. Despite this, self-insured Gen Z drivers paid more than self-insured Millennial drivers in 17 states.
The 17 states shown in the above table are not regionally concentrated, meaning high premiums are not restricted to any one area. These states also run from more urban to more rural, and all have different ranges of violations rates. The most prominent difference between the two groups is age.

Gen Z vs. Millennials

Gen Z and Millennial drivers in the U.S. have comparable rates of driving violations (25.75% versus 24.65%, respectively). However, the average premium for a Gen Z driver is $314, while the average premium for Millennial drivers is $260.
At a federal minimum wage of $7.25 per hour, this means that the average Gen Z driver has to work eight hours more than an average Millennial every month to afford their car insurance premium. (Every member of Gen Z in this study was also self-insured, meaning that their parents would not be responsible for making these payments.)
Maryland is a particularly extreme case. The Gen Z driver violation rate is only 0.55% higher than that of Millennial drivers, but Gen Z drivers pay $150 more per month on average than Millennial drivers in the state.
Maryland also has a minimum wage of $11.75—meaning that even at 40 hours a week, the average Gen Z driver’s weekly paycheck would not be enough to cover their monthly premium.

Boomers vs. Gen X

The youngest generation, however, isn’t the only one to pay higher premiums for safer driving records. In 11 states—Iowa, Indiana, Missouri, North Carolina, Nebraska, New Jersey, Ohio, Rhode Island, Tennessee, Virginia, and Wisconsin—Boomers pay higher premiums on average than Gen X drivers.
Not only do Boomers have lower violations rates in those states, but they are statistically the safest drivers out of any age group, with a national average violation rate of 10.53%. So why are they being charged more?
For Boomers, this answer might lie in regional concentration. While states that charge Gen Z drivers higher premiums aren’t regionally concentrated, states that charge Boomers are primarily located in the eastern U.S.
A recent study from Jerry reported that, on average, East Coast drivers pay about 45% more in monthly premiums than drivers on the West Coast.
Although this doesn’t account for Boomers being charged more than Gen X drivers, it does begin to explain their higher premiums in eastern states.
Another potential reason behind this is that Boomers might own more expensive vehicles. Boomers are estimated to hold over
50% of the nation’s wealth
, which gives them a significant amount of financial security compared to Millennials and Gen Z. More financial security could mean more expensive cars, hence the higher premiums.
Millennials, on the other hand, have been estimated to hold about 3.2% of the nation’s wealth, and Gen Z have not been estimated to hold any amount of wealth yet. A study conducted by
Bank of America
shows that although Gen Z are predicted to surpass Millennials in income by 2030, their average yearly income is around $10,000.
Despite this, Gen Z drivers also have the highest average insurance premium across all age groups, paying anywhere from $54 to $105 more on average than older generations.
Ultimately, higher monthly costs are doing Gen Z drivers an impactful financial disservice: saddled with high premiums and lower wages across much of the U.S., a significant number of Gen Z drivers are primed to go into debt—or to continue the high-cost-low-wage balancing act that Millennials still struggle with.

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