No generation is immune to the financial impacts of coronavirus, but millennials, those born between 1981 and 1996, have had it particularly rough. And, as the COVID-19 recession takes over, it’s getting rougher.
In 2009, many millennials graduated college with an average of $24,000 in student loan debt just as the economy was struck with the Great Recession. Pair that with a crippling economy that had an unemployment rate of 9.5%, and millennials were faced with a long road of job hunting and debt payments. Then, just as millennials were starting to find their financial footing in 2020, the coronavirus pandemic hit.
Today, the unemployment rate is 14.7% and millennials carry an average of $27,900 in personal debt, including credit card debt, car loans, and that ever-present student loan debt. Let’s take a look at the economic landscape for millennials and what they can do to get through another recession.
Millennials facing unemployment
In 2019, the U.S. Bureau of Labor Statistics reported nearly 36 million Americans ages 25 to 34 were employed. Millennials make up the largest percentage of the American workforce, and consequently, work in a variety of industries that have been hit hard by the COVID-19 recession.
Some of the hardest hit industries include airlines, restaurants, and hotels. These parts of the travel and hospitality sector skidded to a halt as fewer Americans traveled and government restrictions on restaurants increased. Sales have tanked, including a 47% decline in sales nationwide for restaurants between March 1 and March 22. The American Hotel & Lodging Association reported 70% of hotel employees have been laid off or furloughed as hotels sit empty.
Millennials are between 23 and 38-years-old now, which means many of them are entering their peak earning years. While job loss is inevitable during a recession, millennials in particular are losing out on what should be some of their best years to earn an income and save for the future.
Delay in life events
It’s no wonder millennials delay major life events, like home buying, marriage, and having kids; they can’t seem to get ahead when the economy takes a nose-dive. In a survey, half of millennials said they delayed buying a home and 26% delayed getting married because of overarching money concerns.
Not only is this generation delaying these milestones, some are still dependent on mom and dad for support. The Pew Center Research reported 15% of millennials live at home with their parents. Millennials are more likely to live at home with their parents and for longer stretches of time compared to older generations when they were the same age. Chalk it up to constant downturn, lost jobs, or looming debt, but more millennials choose to head back home to stay afloat.
There have been hurdles for this generation, but there’s also been progress. Nearly one in four millennials have $100,000 of savings or more, according to a report by Bank of America. Despite their debt load, this generation focuses on emergency funds and other financial goals, which makes it clear that millennials can still progress financially.
The COVID-19 recession might make these goals even more important. Because millennials went through the Great Recession, this cohort might better understand the importance of saving more and spending less. For example, according to the latest survey by Freedom Debt Relief, 34% of millennials are, or anticipate, spending less on entertainment.
While millennials might shelter cash during a recession, they still aren’t all that optimistic about their financial wellbeing. According to a Bank of America study, 51% of millennials feel behind in their overall financial situation. Retirement, savings, and paying off debt are important financial goals and with the COVID-19 recession now full blown, millennials will need to get especially creative to continue their journey of financial wellbeing.
The good news: What millennials can do now
Every generation has dealt with economic hardships – World War II, the 1970’s oil shock and inflation, 9/11, and the Black Monday stock market crash – to name just a few. It’s the ability to overcome these hardships that can make or break a generation financially. Millennials, and other generations for that matter, are resilient enough to get through this recession. Here are three ideas to get millennials (and everyone else) facing financial challenges started.
First, millennials are the most educated generation, with 39% of millennials obtaining a bachelor’s degree or higher, according to Pew Research Center. As more workers log on remotely, millennials can use their education and tech knowledge to create new ways for businesses to thrive with a remote or changing workforce.
Second, life events don’t have to be delayed. Maybe this generation will take a new view of big life milestones. A backyard wedding with a socially distant group can still be a meaningful celebration. If buying a house is the next step, the possible dip in the housing market could help millennials capitalize on low interest rates and actually have a chance at home ownership — where it may have been out of reach before.
Third, financial wellbeing is deeply personal. Millennials may take a more individual view of what personal and financial success means to them. It could be as simple as negotiating a pay raise or creating a budget for the first time. As one of the more tech-savvy generations, they may use apps to set up automatic savings contributions into high-yield savings accounts or make sure they are contributing up to the employer match in a 401(k).
Unemployment may be a factor, but millennials know how to reduce discretionary spending, look into forbearance or deferral programs, and apply for unemployment benefits as soon as they have lost their job. These skills may help them become the one of the most financially resilient generations our country has turned out.
Despite setbacks, there’s still hope
The financial outlook for millennials is complicated. They have trudged through the Great Recession and so may be more prepared to face the COVID-19 recession. But sometimes preparedness needs a helping hand. Freedom Debt Relief is here to help you understand your options for dealing with your debt, including our debt relief program. Our Certified Debt Consultants can help you find a solution that will put you on the path to a better financial future. Find out if you qualify right now.
- Should You Try and Find a Side Gig During Lockdown? (Freedom Debt Relief)
- Will We Get Another Stimulus Check? (Freedom Debt Relief)
- What’s the Difference Between Furlough, Layoff, and Termination? (Freedom Debt Relief)
- How Millennials are Being Set Back by Back-to-Back Global Crises (Fortune)
- Telework May Save U.S. Jobs in COVID-19 Downturn, Especially Among College Graduates (Pew Research