Gen Z’s Mental Health, Economic Distress and Technology

Mental health indicators for younger generations have worsened in the past decade. Poor mental health can have economic consequences (PDF) for individuals, their families, workplaces and communities. It can also be a barrier to finishing school and to entering or staying in the labor market, and it can reduce labor productivity, all of which could result in long-term consequences for young adults’ professional development and earnings.

For example, in 2022 the rate of depression in young adults, 18-24 years old, who are members of Generation Z, was over 12% compared with 8% for adults 25-64 years old. This difference can deepen economic disparities between the two groups.

Rise in Depression: Young Adults vs. Older Adults, 2010 to 2022

SOURCE: 2024 State of Economic Equity, which used data from the National Health Interview Survey (2010-22) and authors’ calculations.

NOTES: Young adults are ages 18 to 24. The 2022 group consists of members of Gen Z. Older adults are ages 25 to 64. Data show weighted mean values for the percentage of adult respondents who felt depressed monthly. Rates prior to 2019 should not be directly compared because survey calculations changed in 2019.

What do we know about the relationship between mental health and economic factors?

• A 2011 report from the Harvard School of Public Health and the World Economic Forum projected that the cost of mental illness globally would be $6 trillion by 2030. The most common disorder is depression, a 2022 article in Applied Health Economics and Health Policy found.
• Research from 2020 indicates that the economic cost per treated person (PDF), which includes treatment costs as well as loss of productivity, equates to between $1,180 and $18,313, depending on the condition. Costs are lower per person for those with the most common conditions of depression or anxiety disorders.
• In the U.S., poorer work performance due to depression can cost a company an average of $5,524 per person per year, which also impacts afflicted individuals by limiting career progression, income growth and job stability.

Rent and Student Loan Debt as Economic Distress Factors for Young Adults 

Two potential sources of economic distress that might impact young adults’ mental health are rent costs and student loan debt. Just over 80% of young adults are renters, according to data from the U.S. Bureau of Labor Statistics.

According to a 2024 report on U.S. rental housing (PDF) from the Joint Center for Housing Studies of Harvard University:

• In the past 20 years or so, median rents have increased over 20% while median income has risen just 2%.
• Of the young adults who were household heads, 61% were cost burdened (spending more than 30% of their income on housing and utilities) in 2022.
• At the same time, unit shortages grew by 2.9 million units from 2001 to 2021, which means that there have been both increases in costs and fewer affordable rental units than in the past.

These challenges could result in young adults making financial sacrifices by cutting back in other spending categories to make ends meet or moving away from networks to find affordable housing. They could also result in the young adults not being able to pay their full rent.

The cost of housing, compounded with debt like that from student loans, can constitute a heavy financial burden. Tuition and board for a four-year college increased by 40% between 2001 to 2023, going from $22,118 in the 2000-01 school year to $30,884 in the 2022-23 school year, according to data from the National Center for Education Statistics. Median personal income has not kept pace, helping lead to student debt growth of over 230% between 2006 and 2020. Furthermore, after controlling for other types of debt, student loan debt was found to be negatively associated with life satisfaction and psychological well-being. In fact, student loan debt alone has been described as a significant motive for delaying family formation and decreasing homeownership depending on the level of debt.

Evolving Technology and Young Adults’ Mental Health

Another reason for the higher prevalence of depression among young adults may be certain types of internet use and interactions. Research has been emerging on gaming and social media effects on mental health. For instance, gaming disorder is now part of the International Classification of Diseases 11th Revision. The American Psychiatric Association’s Diagnostic and Statistical Manual of Mental Disorders Fifth Edition also established criteria for internet gaming disorder but recognizes it as a condition that needs additional research. While causality has not been determined, research shows that 1 in 3 individuals who have a gaming disorder also have depression. Furthermore, while it is not part of the diagnostic manual, social media use has been associated with depression in adolescents and young adults.

As the long-term effects of social media use are still being understood, we are experiencing the emergence of another technology with generative AI, a type of artificial intelligence. Already, teens deem it acceptable to use some generative AI platforms to write essays (20%), solve math problems (39%) and conduct research (69%). Many young adult students and workers may need to quickly adapt their behaviors, such as by regulating use to protect critical thinking skills, working to better discern fact from fiction, and finding uses to hone, rather than stifle, creativity. For instance, only 35% of adults ages 18-29 could demonstrate full awareness of AI in daily life. With the risk of deepfakes and misinformation, this could place both the mental health of young adults and the quality of their work at risk.

Additional research is needed to understand the impact of past and emerging technologies on mental health and their effects on worker productivity.

Young Adults Seek Access to Mental Health Care

In recent years, there has been an increase in the access that patients, such as those in rural areas, have to providers through telehealth. Psychiatry is one of the areas with the most prominent use of telehealth, according to a January 2019 American Medical Association article.

What about mental health care affordability? Progress has been seen in this area as well. Research has shown that after dependent coverage expansion for 19- to 25-year-olds in 2010, there was a modest 2.9% decrease in admissions of uninsured patients for inpatient admissions and emergency department visits for psychiatric disorders. Additionally, increases in the number of mental health providers accepting Medicaid (PDF) have improved affordability across many states. However, updated data could help with examining affordability as an issue for many young adults, whose income and wealth are generally much lower than those of adults as a whole and whose wages have been stagnant.

Data from the National Health Interview Survey provide an illustration of factors around mental health services. While rates prior to 2019 should not be directly compared because survey calculations changed in 2019, the proportion of young adults who saw a mental health provider increased and diverged from that of older adults since 2015, as can be seen in the first figure below.

Saw a Mental Health Care Provider: Young Adults vs. Older Adults

SOURCES: National Health Interview Survey (2010-22) and authors’ calculations.

NOTES: Young adults are ages 18 to 24. The 2022 group consists of members of Gen Z. Older adults are ages 25 to 64. Data show weighted mean values for the percentage of adult respondents who saw or talked to a mental health provider in the last 12 months. Rates prior to 2019 should not be directly compared because survey calculations changed in 2019.

At the same time, the share of young adults seeking treatment but not being able to afford it also diverged from that of older adults, as can be seen in the next figure.

Needed but Couldn’t Afford Mental Health Care: Young Adults vs. Older Adults

SOURCES: National Health Interview Survey (2010-22) and authors’ calculations.

NOTES: Young adults are ages 18 to 24. The 2022 group consists of members of Gen Z. Older adults are ages 25 to 64. Data show weighted mean values for the percentage of adult respondents who needed mental health care but couldn’t afford it in the last 12 months. Rates prior to 2019 should not be directly compared because the survey calculations changed in 2019.

The statistics on young adults seeking and not being able to afford mental health care, coupled with their higher depression levels, suggest that while more young adults are seeking treatment and there have been efforts to improve affordability for young adults, they still are struggling to pay for treatment.

Young adults have a long work life ahead and are critical to tomorrow’s economy. Early adulthood is when the work from child-rearing and education (PDF) come to a confluence where we can see young adults’ economic contribution. However, mental health issues can mean economic setbacks for the individual, family and the community as a whole. Research has shown that early prevention and early intervention can help lessen those setbacks. Perhaps through such measures, education and income disparities that emerge can also be reduced, thereby building a stronger economy for new generations.