Millennials still recovering from the Great Recession now face a downturn that’s being compared to the Great Depression.
The economic toll of the coronavirus pandemic is immense, with tens of millions unemployed and the US economy shrinking at a rate unseen in more than a decade. Global financial institutions like the International Monetary Fund are warning that Covid-19 could trigger a global economic slowdown comparable only to the Great Depression.
One of the groups likely to suffer the most is millennials, many of whom have yet to fully recover from the Great Recession.
“One thing we know is that younger workers who were more fragile are already being more hard hit. Older folks will suffer greater wealth losses, but at least they had that wealth cushion,” the Atlantic’s Annie Lowrey told Vox’s Sean Illing recently.
Millennials, often categorized as people born between 1980 and 1997, are economically vulnerable in part because they are an incredibly diverse generation, with about 55 percent being people of color. This diversity suggests that their economic situation is more broadly affected by financial inequalities than older generations.
In general, recent polls reveal that millennials — of all backgrounds — are experiencing high anxiety around how the coronavirus will affect their economic realities. For instance, a poll from the Pew Research Center conducted from April 7 to 12 (among 4,917 adults, with a 2.1 percentage point margin of error) found American millennials to be the most pessimistic of any age group about the future of the economy.
When asked whether the economy would be better or worse in one year, Americans over age 65 were the most optimistic, with 69 percent saying things would improve. But millennials were more likely to believe that things would be the same (and they are not good now, as Vox’s Emily Stewart has explained) or even worse. The majority of those between ages 18 and 29 said things would be the same or worse — 57 percent — as did 48 percent of those between ages 30 and 49.
Adding to millennials’ economic anxiety seems to be concerns about basic needs, including covering the costs of food and shelter. In early April, 60 percent of millennial-registered voters told pollsters at Quinnipiac University that the pandemic has them concerned about being unable to afford food, rent or mortgage, or medical expenses.
Millennials have every reason to be concerned, about their present and their future. Here are 14 charts that show why:
More young people have been laid off — and many of those still with jobs have had to take pay cuts
To get a sense of what things are like now, and how millennials are affected by cuts to their work hours, it’s helpful to look at this chart, from the Pew Research Center:
This chart, based on data from a poll of 4,917 adults (taken from April 7 to 12, with a 2.1 percentage point margin of error) shows those between ages 18 and 29 have been the most affected by layoffs, with 35 percent saying they’ve lost their job. That cohort has been most affected by pay cuts as well, with 45 percent reporting reduced wages.
Older millennials, who are entering their peak earning years, make up the second most affected group — 30 percent said they’ve been fired and 39 percent said their wages have been cut. Overall, a PBS NewsHour/NPR/Marist College poll found, with a 3.8 percentage point margin of error, that 55 percent of Americans under the age of 45 had either had their hours cut, been laid off, or been furloughed as of April 26.
Millennials of color have been particularly affected by layoffs. The unemployment rate for people of color was higher than it was for white Americans before the pandemic hit the US, and from February to March, it rose more sharply. According to the US Bureau of Labor Statistics, black Americans saw a 0.9 percentage point increase, Latinx Americans a 1.6 percentage point increase, Asian Americans a 1.6 percentage point increase, and white Americans, a 0.9 percentage point increase.
Essentially, those making the least — including black and Latinx millennials — were more likely to be laid off than those making more.
It isn’t by chance that millennials are the group most affected by layoffs, furloughs, and wage reductions — and it appears that the jobs many worked were especially vulnerable to the restrictions needed to counter the pandemic.
Millennials disproportionately work in the industries hit hardest
Every industry has been affected by layoffs, but looking at the data from March, it is clear that the leisure and hospitality industry (which includes hotels and restaurants) alone lost 459,000 jobs.
In March, the sectors with the greatest job losses were in leisure and hospitality; health care and social services; professional services (like consulting, administrative, and IT roles); and retail sectors. And all four of those rely heavily on millennial labor.
As the above chart shows, industries that fall under the leisure and hospitality sector are majority millennial — according to the Bureau of Labor Statistics, in 2019, 58.5 percent of “accommodation and food services” workers were between the ages of 20 and 44 (with another 15.9 percent being under age 20). And 52.9 percent of those employed in the “arts, entertainment, and recreation” industries (which include professional sports, museums, and concert venues) were between 20 and 44.
Some industries with older workers — like farming — are clearly suffering more now than in March. But as Vox’s Matt Yglesias has noted, even as stay-at-home measures are relaxed, the millennial-heavy industries will likely be slowest to return to their former levels of profitability. People still need houses and apartments — a sector dominated by older Americans — amid the pandemic. But it isn’t clear there will be much appetite for dining or attending large sporting events anytime soon, meaning millennials working in the most affected sectors may face financial difficulties in the immediate future.
Millennials were in bad shape before the pandemic due to student debt
Layoffs, furloughs, and wage cuts due to the pandemic have stressed many households — particularly considering that Americans, in general, were dealing with nearly $15 trillion in debt:
Where older and younger Americans differ is that older Americans are more likely to have debt due to assets like homes that could, theoretically, be liquidated if times get tough. Most younger Americans, however, have much of their debt tied up in an asset that has no immediate value: their college education. (And older millennials have debt due to both.)
What neither of these charts tells us is the scale of millennials’ student loan debt burden. Looking just at federal student loans — which make up 92 percent of all student loans — the Department of Education found that Americans 24 or younger had $116 billion in debt at the end of 2019; those 25 to 34 had $498 billion; and those 35 to 49 had $581 billion. People above the age of 50, on the other hand, owed about $323 billion in student loans.
On average, millennials owed somewhere between $5,000 and $60,000 in student debt, and studies have found that debt comes with a cost. University of Wisconsin researchers Fenaba R. Addo and Yiling Zhang noted just how burdensome that debt can be in an essay in the 2019 series “The Emerging Millennial Wealth Gap” from the New America think tank: “It is not surprising that the median wealth of all Millennials with any debt at age 30 is lower than those with no debt who attended college; however, their median wealth levels are also lower than young adults who never attended college.”
Many millennials took on college debt with the assumption that borrowing heavily while young would lead to higher wages as one aged. But given the high — and growing — cost of college education, younger millennials found themselves needing to wait longer than older millennials to see those benefits. And now, the economic crisis brought on by the pandemic raises the question of whether those benefits will ever materialize. This is true for millennials broadly, but even more true for millennials of color.
Wage gaps and heavier student loan burdens could make the pandemic more difficult for millennials of color
As is the case with health outcomes, the pandemic has revealed longstanding economic disparities.
Data from the Bureau of Labor Statistics shows that in the first quarter of 2020, the median pay for a black male worker between the ages of 25 and 54 was $891 per week; for a Latino man of the same age, it was $796 a week. Meanwhile, a white man of the same age averaged $1,128 per week. Women of all three racial groups made less than the average white man, with white women making $906, black women making $767, and Latina women making $701.
And for those millennials of color who are unemployed or furloughed, unemployment benefits (not counting the temporary $600 per unemployment check provided by the CARES Act) are calculated based on one’s former weekly earnings. This means these preexisting wage gaps will only exacerbate inequality at a particularly trying time, as Americans of color can expect to receive smaller unemployment benefits on average than white Americans.
This also means that millennials of color who attended college face a compound problem — first, they make less, making their degrees less valuable. Second, they, particularly black students, borrowed heavily to earn those degrees, and therefore have more to pay off. Data collected by New America’s Wesley Whistle found that in 2016, 84 percent of black college-goers had taken out student loans, compared to 67 percent of white students.
And even before the coronavirus began affecting wages, these two factors caused black — and Latinx — college students to have more trouble than their white peers with staying current on their loan payments. In 2018, the Federal Reserve found that 28 percent of black Americans ages 18 to 29 with student loans had fallen behind in their payments, as had 15 percent of Latinx college students in the same age range. By comparison, 7 percent of white 18- to 29-year-olds with debt were behind. And this was when the economy was doing “well.”
People of color are more affected in general — and that means more financial stress for millennials
Not all states have broken down their confirmed coronavirus case data by ethnicity, but a number of particularly hard-hit cities and states have, including Illinois, Michigan, and New York. And their numbers show black and Latinx Americans being disproportionately affected by Covid-19 — particularly those between the ages of 18 and 49, as the Centers for Disease Control and Prevention shows:
— CDC (@CDCgov) April 24, 2020
Some states have broken down this data further. Illinois, for instance, tracks confirmed cases based on age and ethnicity and found (where race and ethnicity information is available) that black and Latinx millennials are at particular risk for the disease.
Looking at available data, Latinx Illinoisans appear at particular risk compared to people of other ethnic backgrounds, with Latinx millennials ages 20 to 29 having more than 2,459 confirmed cases as of May 4.
All of this adds to the economic stress millennials — particularly millennials of color — were already facing. Coronavirus testing is free, but any hospitalizations or emergency room visits related to coronavirus care are not. The average Covid-19-related hospital stay for an insured person is believed to be about $30,000, according to the trade group America’s Health Insurance Plans. An analysis from FAIR Health, a nonprofit focused on the cost of care, found those without insurance — as about 16 percent of millennials are — can expect to pay between $42,486 and $74,310.
And coronavirus costs don’t just fall on those who have the virus. They also disproportionately affect non-infected millennials of color who find themselves with unexpected hospital — and even funeral and interment — expenses for older family members. Death data is still incomplete, but what we have shows that black Americans make up one-third of all US coronavirus deaths, according to the Associated Press. Notably, the US is about 13 percent black; the areas covered by the incomplete data are 14 percent black.
A 2019 Federal Reserve study found that 39 percent of Americans would not be able to weather a $400 emergency, and an SSRS/Bankrate poll conducted in January (with a 3.39 percent margin of error) found that 59 percent of Americans would be unable to cover a $1,000 emergency. Coronavirus-related health and end-of-life costs are far higher — they would be ruinous for many Americans in the best of times. That they would seem to disproportionately fall on those more likely to be furloughed or laid off, and to have heavier than average student loan burdens, makes them more onerous.
Millennials delayed home buying, which means they don’t have stable equity
With fewer resources, millennials have delayed buying homes — again, assets that for older Americans provide some measure of economic security amid sudden downturns like those created by the pandemic.
An analysis from Deutsche Bank shows that the median age of Americans buying homes increased sharply following the Great Recession. In 2009, the median home-buying age was about 39. In 2019, when millennials were between the ages of 22 and 39, the median age of homebuyers was 47.
Homeownership has been particularly difficult for black millennials. A 2019 report by the National Association of Real Estate Brokers found that 16 percent of black millennials owned homes in 2017, compared to 46 percent of white millennials, 34 percent of Asian American millennials, and 29 percent of Latinx millennials. The report’s authors found that even prior to the pandemic, fewer than 40 percent of black millennials were expected to own a home by the time they were 50.
All this means that few millennials will exit the pandemic with an asset they can liquidate or leverage for loans, making their recovery all the more difficult — and making them all the more vulnerable to the next recession.
Millennials never really recovered from the Great Recession — and this time is looking worse
The Great Recession hit millennials really hard. They faced a sharp increase in unemployment, as this chart from the Bureau of Labor Statistics illustrates:
That chart only includes people born in 1980 and ’81, but it is reflective of the trends among all millennials — by the time the recession eased in 2010, the Pew Research Center’s Drew DeSilver notes, unemployment was at 15.5 percent for Americans ages 20 to 24.
In the decade after, millennials struggled to recover. A 2018 study by the St. Louis Federal Reserve found that while older Americans recovered in the years following the recession, millennials continued to sustain economic losses, so much so that by 2016, the median wealth of a household headed by a millennial was 34 percent lower than historical models suggested it should have been.
Part of this is due to a decline in millennial income — the St. Louis Fed found that the median income for millennials was 10 percent lower in 2016 than it was pre-recession in 2007. Also contributing to a decline in net worth, the study’s authors note, is that millennials were in a poor position to capitalize on some of the opportunities that allowed older Americans to rebound more quickly, such as low stock and property prices.
They also entered a job market during a period of high unemployment and low demand for workers, and found their wages depressed; a 2017 study by the advocacy group Young Invincibles found millennials to have median wages 20 percent lower than Americans of the boomer generation did at their age.
Research shows that income levels began to recover for some millennials by 2016. The average millennial college graduate was making about 7 percent more than expected by then, according to the 2019 New America report. Millennials who didn’t go to college, however, made about 9 percent less than expected. And as one might expect from the wage gap discussed before, there was a disparity in the recovery by ethnicity, leading to a larger racial wealth gap than existed previously.
In the New America report, Reid Cramer notes, “The racial wealth gap in 2016 is larger than it was in the early 2000s, when the average non-Hispanic White household had ‘only’ six to seven times the wealth of the average African American household.”
The Federal Reserve studied the racial wealth gap in 2016 and found the median net worth of a white American family was $171,000. The median net worth of black and Latinx families, however, was $17,600 and 20,700, respectively. Or, to compare as Reid did, the average white family had about 10 times the wealth of the average black family, and about 8.5 times as much as the average Latinx family. Reid also notes that far more black and Latinx families have zero or negative net worths than white families — nearly 20 percent of black families, and 15 percent of Latinx families.
This wealth gap — and millennials’ difficulties in building wealth in general — is likely to be exacerbated by the pandemic. As Vox’s Emily Stewart has written, the US is already in a recession, and one analysts expect to become worse. Morgan Stanley has said investors should expect US GDP to fall by 37.9 percent in the second quarter of the year. Whether the economy will improve after that is a matter of debate. But even if it does, lasting damage will have been done, with millennials, again, among the most affected.
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