They’re facing a second once-in-a-lifetime downturn at a crucial moment.By Annie Lowrey
Hello, lost generation.
The Millennials entered the workforce during the worst downturn since the Great Depression. Saddled with debt, unable to accumulate wealth, and stuck in low-benefit, dead-end jobs, they never gained the financial security that their parents, grandparents, or even older siblings enjoyed. They are now entering their peak earning years in the midst of an economic cataclysm more severe than the Great Recession, near guaranteeing that they will be the first generation in modern American history to end up poorer than their parents.
It is too soon to know how the unfurling business-failure and unemployment crisis caused by this novel public-health crisis is hitting different age groups, or how much income and wealth each generation is losing; it is far too soon to know how different groups will rebound. But we do know that Millennials are vulnerable. They have smaller savings accounts than prior generations. They have less money invested. They own fewer houses to refinance or rent out or sell. They make less money, and are less likely to have benefits like paid sick leave. They have more than half a trillion dollars of student-loan debt to keep paying off, as well as hefty rent and child-care payments that keep coming due.
Compounding their troubles, Millennials are, for now, disproportionate holders of the kind of positions disappearing the fastest: This is a jobs crisis of the young, the diverse, and the contingent, meaning disproportionately of the Millennials. They make up a majority of bartenders, half of restaurant workers, and a large share of retail workers. They are also heavily dependent on gig and contract work, which is evaporating as the consumer economy grinds to a halt. It’s a cruel economic version of that old Catskill resort joke: These are terrible jobs, and now all the young people holding them are getting fired.
What little data exist point to a financial tsunami for younger workers. In a new report, Data for Progress found that a staggering 52 percent of people under the age of 45 have lost a job, been put on leave, or had their hours reduced due to the pandemic, compared with 26 percent of people over the age of 45. Nearly half said that the cash payments the federal government is sending to lower- and middle-income individuals would cover just a week or two of expenses, compared with a third of older adults. This means skipped meals, scuppered start-ups, and lost homes. It means Great Depression–type precarity for prime-age workers in the richest country on earth.
Recessions are not good for anyone, from infants to the elderly. Nor are pandemics. Americans born during this calamity will be more likely to have low birth weights and to be in poor health generally, with lifelong effects. Children will not just endure this trauma—manifested in lost months of schooling, skipped meals, housing volatility, and increased abuse—but will carry it with them. Zoomers graduating into the recession will die sooner because of it, suffering increased incidence of heart disease, lung cancer, liver disease, and drug overdoses in the coming decades; they will also earn less over the course of their lives. The elderly are likely to be the most economically insulated group but are facing the most terrifying health consequences.
Among adults the news isn’t good, either. And particularly not for those youngish-but-no-longer-young adults who came into this crisis already vulnerable, already fragile, already over-indebted and underpaid. The Millennials were left with scars during the Great Recession that never quite healed, and inherited an economy structured to manufacture precarity for the young and the poor and black and brown, and to perpetuate wealth for the old and the rich and white.
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For the most part, kids of the 1980s and 1990s did it right: They avoided drugs and alcohol as adolescents. They went to college in record numbers. They sought stable, meaningful jobs and stable, meaningful careers. A lot of good that did. Studies have shown that young workers entering the labor force in a recession—as millions of Millennials did—absorb large initial earnings losses that take years and years to fade. Every 1-percentage-point bump in the unemployment rate costs new graduates 7 percent of their earnings at the start of their careers, and 2 percent of their earnings nearly two decades later. The effects are particularly acute for workers with less educational attainment; those who are least advantaged to begin with are consigned to permanently lower wages.
Slogging their way through the aughts, avocado toast in hand, the Millennials proved those miserable studies true. During the recession, half of recent graduates were unable to find work; the Millennials’ formal unemployment rate ranged as high as 20 or 30 percent. High rates of joblessness, low wages, and stagnant earnings trajectories dogged them for the following decade. A major Pew study found that Millennials with a college degree and a full-time job were earning by 2018 roughly what Gen Xers were earning in 2001. But Millennials who did not finish their post-secondary education or never went to college were poorer than their counterparts in Generation X or the Baby Boom generation. Economic growth, in other words, left the best-off Millennials treading water and the worst-off drowning.
Crummy wages collided with a cost-of-living crisis and heavy debt loads. The cost of higher education grew by 7 percent per year through the 1980s, 1990s, and much of the 2000s, far faster than the overall rate of inflation, leaving Millennial borrowers with an average of $33,000 in debt. Worse: The return on that investment has proved dubious, particularly for black Millennials. The college wage premium has eroded, and for black students the college wealth premium has disappeared entirely. While struggling to pay down their student loans, millions of younger Americans have also found themselves shut out of the real-estate market by housing shortages and attending sky-high prices. Rich Boomers bought the houses and made building new ones impossible. Millennials were forced to keep on renting, transferring wealth from the young to the old.
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Put it all together, and the Millennials had no chance to build the kind of nest eggs that older generations did—the financial cushions that help people weather catastrophes, provide support to sick or down-on-their luck relatives, start businesses, invest in real estate, or go back to school. Going into the 2008 financial crisis, Gen Xers had twice the assets that Millennials have today; right now, Gen Xers have four times the assets and double the savings of younger adults.
Millennials now are facing the second once-in-a-lifetime downturn of their short careers. The first one put them on a worse lifetime-earnings trajectory and blocked them out of the asset market. The second is sapping their paychecks just as they enter their peak-earnings years, with 20 million kids relying on them, too. There’s no good news in a recession, and no good news in a pandemic. For Millennials, it feels like there is never any good news at all.