Millennials Don’t Stand a Chance
They’re facing a second once-in-a-lifetime downturn at a
crucial moment.
By Annie Lowrey
April 13, 2020
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.
Read: Generation C has nowhere to turn
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.
Annie Lowrey: The great affordability crisis breaking
America
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.
Ibram X. Kendi: What the racial data show
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.
Read: The four possible timelines for life returning to
normal
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.
