- Just as many Millennials had begun to build careers and savings from the troughs of the Great Recession, COVID-19 hit
- Compared to other demographic groups at the same point in their lives, Millennials have lower levels of real income, homeownership and net worth
No one is going to escape from the financial impacts of the COVID-19 pandemic but Millennials will feel the most pain. These 20’s – 30’s year olds were already walking on a precipice with huge levels of student debt and missed years of essential wage growth because of the 2009-2009 financial crisis and then BAM!!!…the coronavirus pandemic hit.
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Kathryn Edwards, a labor economist with the Rand Corporation, said, “It’s hard to imagine someone making it through both of these recessions in this age group really unscathed.”
Once-a-generation recessions don’t usually occur a decade apart from each other. According to economists at Yale and the University Rochester, people entering job markets during high unemployment periods usually see a “10% hit to income in the first year, with the effect averaging out to a 1.8% reduction in yearly earnings over 10 years.” And, because economic crises usually shackle job mobility, effects on one’s professional life can, according to Carnegie Mellon economics professor Shu Lin, last for 20 years.
Millennials first entered the job market during the Great Recession while unemployment rates were high. Once again, Millennials, many of whom lost whatever jobs they held in January-February 2020, will re-enter the job market during unprecedented high unemployment when the economy re-opens and will again have to deal with likely even more severe reductions in yearly earnings over another ten years.
Of course, every generation will have their own economic fallout to deal with from COVID-19. The International Labor Organization indicates millions of people all ages are now unemployed and that over a billion are at high risk of a pay cut or losing their jobs altogether. Gen-Z-elders are graduating into citywide lockdowns and Boomers who have retirement plans/portfolios have now experienced two successive routs in the financial markets. The nearly 50% of 55 and older households have no retirement portfolios and have nothing saved whatsoever. And, importantly, those without college diplomas and working in service sectors of the economy and construction are seeing unemployment rates right now that are nearly three times unemployment rates of people with college degrees.
Those with college degrees will again be stymied in career advancement because these back-to-back recessions mean that Boomers will simply work longer or forever.
Chip Espinoza, dean of strategy and innovation at Vanguard University, said, “You’re really looking at a workforce that is going to continue to age and continue to create challenges for younger generations in their upward mobility…Millennials will have to rent longer, co-habitate longer and stay in starter homes longer.”
Thanks to BloombergNews’ Catherine Bosley, Max Reyes and Jeff Green.
Also read: Podcast: Time Is Running Out For Gov’t Programs | SBA Programs For Agents, Goldman Sachs Predicts Unemployment to Hit 15% This Year, Podcast: Global Economic Crash, What Next? | Tim and Julie Harris Sunday Special