Gen Z Doing the Least With Fewest Licenses and Cars

Ben Guess
Updated on Jun 27, 2022 · 4 min read

Key Insights

  • Members of Generation Z, born from 1997 to 2006, are less likely than previous generations to have a driver’s license and own a car, yet they spend less than Millennials, Gen Xers, or Baby Boomers on public transit every year.
  • While Gen Z spends less on transportation overall — including car ownership — those costs eat up a bigger chunk of their take-home pay than any other generation.
  • Hit hard by the COVID-19 pandemic, members of Gen Z report the highest level of concern over their ability to make their car payments.

Gen Z spends 20%-30% of their income on transportation

Gen Z owns fewer cars on average than any other generation, according to business intelligence firm Morning Consult. Still, Gen Z-ers spend a bigger chunk of their paychecks on overall transportation expenses, which include the costs of owning a vehicle, such as car payments and insurance, as well as money spent on public transportation. 
In 2020, the latest year for which data was available, the average Gen Z-er made $37,300 a year and spent $7,300 on transportation — 20% of their annual pay, according to the Bureau of Labor Statistics (BLS). This was down from 30% in 2019, before COVID-19 hit. Millennials, Gen X-ers, Baby Boomers, and the Silent Generation all spent 10%-14% of their annual income on the same transportation costs in 2020, compared to 14%-16% in 2019.
By contrast, Gen Z-ers spent relatively little on public transportation: 0.5% of their income in 2020, down from 2% in 2019. While that was more than other generations spent as a share of income, it was less in dollar spending per person than any other generation except the Silent Generation, the youngest of which are now 77 years old.

Not owning a car may be a necessity for Gen Z-ers 

One likely reason Gen Z-ers own fewer cars per person than any other generation is money. Of those surveyed by Morning Consult, Gen Z expressed the greatest lack of confidence in their ability to make their car payments. More than twice as many Gen Z-ers and Millennials said that COVID-19 upended their financial security. Given their youth, members of Gen Z were more likely to have lower-paying jobs and had much less time to build savings prior to the pandemic.
But for some members of Gen Z, opting out of car ownership and even driving appears to be an active choice. Data from the U.S. Department of Transportation shows a significant drop in the percentage of 18-23-year-olds who held driver’s licenses in 1988, 2004, and 2020 (years when the oldest Gen X-ers, Millennials, and Gen Z-ers were 23). 
In 1988, 91% of 23-year-old Gen X-ers had a driver’s license, compared to 82% of Millennials in 2004 and 82% of Gen Z-ers in 2020. Similarly, 77% of 18-year-olds had a license in 1988, but only 67% did in 2004 and only 58% did in 2020.
Gen Z has grown up with easier alternatives to driving than other generations, including ride-sharing and real-time information about public transportation options. It's much simpler today than in 1988 or even in 2004 to plan trips that don’t require being in the driver’s seat.

Conclusion

Gen Z has fewer driver’s licenses and cars than previous generations, but in the case of the latter, it’s not clear whether it’s out of choice or financial necessity. Gen Z-ers’ lower rate of car ownership may end when they start to earn more money, but even then many may choose not to participate in — and spend on — America’s iconic and costly expression of personal freedom.

Methodology

Jerry examined data from the BLS’s Consumer Expenditure Survey from 2019 and 2020, comparing listed transportation costs for each generation to after-tax income. We also looked at DOT licensing data in 1988, 2004, and 2020 to determine licensing rates among the oldest members of Gen X, Gen Z, and Millennials. 
For the sake of this study, we counted Gen Z as people born 1997-2006, Millennials as 1981-1996, Gen X as 1965-1980, Baby Boomers as 1946-1964, and the Silent Generation as 1945 and earlier.

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