The coronavirus recession hasn’t been easy on anyone, but millennials may have been hit hardest.
According to many economic experts, the 73 million millennials in the U.S. could experience financial setbacks from COVID-19 that have a longer-reaching impact than those experienced by any other age group.
Another recession for millennials
Economic hardship is nothing new for this demographic. The great recession of 2008 hit millennials when they were still in college or just starting their careers. For some, it meant the choices for their first adult job were very slim. For others, it meant dropping out of college when a four year degree could no longer guarantee a decent wage. Compounded with the harsh realities of student loan debt, rising living costs and wage stagnation, many millennials are playing catch-up well into their late 30s.
“For this cohort, already indebted and a step behind on the career ladder, this second pummeling could keep them from accruing the wealth of older generations,” says Gray Kimbrough, Washington, D.C. economist and American University professor.
Job losses across the board
More than 40 million workers in the U.S. have filed for unemployment since the beginning of the pandemic. According to a recent report by Data for Progress, 52% of respondents under age 45 have lost jobs, been furloughed or had their work hours cut due to COVID-19. In contrast, just 26% of respondents over age 45 have suffered a job loss of some kind during the coronavirus pandemic.
Millions of millennials have lost jobs that cannot be performed in a way that adhere to social distancing mandates. At the height of the economic lockdowns in April, the economy shed a staggering 20.5 million jobs. Of these jobs, 7.7 million were in the leisure and hospitality sector — a sector dominated by millennials. An additional 1.4 million lost jobs were in health care, primarily in ambulatory services — another field that employs a disproportionately large number of millennials.
Why are millennials worse off?
Many millennials who are still on the rebound from the great recession are carrying piles of debt and have minimal savings — or none at all.
According to surveys conducted in 2018 by the Federal Reserve, one in four millennial families have a negative net worth, or debts that outweigh their assets. Normally, this would not be a serious issue as long as the family is making sufficient income, but with jobs disappearing, many young families could face financial devastation in the wake of COVID-19.
Millennials also tend to neglect their retirements. The National Institute on Retirement Security reports that 66% of millennials in the workforce have nothing put away for their retirement.
Can millennials recover?
There is hope. Many millennials are viewing the unique challenges presented by the pandemic as an opportunity to reevaluate their career track, find side hustles and leverage their unique skill sets to go into business for themselves.
While some view millennials as "spoiled" and "lazy," the truth is, the young Americans that make up Gen Y are incredibly adaptable, especially when it comes to their career. With hard work, perseverance and small steps toward a better future, millennials can pull themselves up and regain their financial health.
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