She and her partner, Adam Tuthill, welcomed their second baby in late January. They were making quite a bit of money and hoped to buy a house in the next year.
Then the coronavirus pandemic hit and upset their plans. Friend, 30, was taken off work in a restaurant bakery in mid-March and is struggling, like many, to get all of his unemployment benefits. Tuthill, 38, saw his independent commercial fishing business dry up during his most profitable season.
“I feel like my generation has not had any breaks,” said Friend, who also hoped to start taking university courses this year. “When I graduated from high school in 2008, it was a recession. Now here I am, I have just started a family and I am basically in another recession. “
While Americans of all ages are hit hard by the economic turmoil caused by the coronavirus epidemic, millennials are particularly at risk. Now around 24 to 40 years old, they have a much smaller financial cushion than previous generations at their age to protect them from job losses and economic uncertainty.
“Generation Y as a whole was more vulnerable to this,” said Ana Hernandez Kent, policy analyst at the Federal Reserve Bank of St. Louis. “Especially for those who have lost their jobs, lost their income, and who no longer have a safety net to rely on, they could really, really suffer and have trouble recovering. “
Earlier this year, CNN reported on the plight of millennials, who are on their way to being the first generation to stay ahead of their parents in terms of employment or income status, studies have shown. More than a dozen have written about their difficulties in finding well-paying jobs, managing student loans and buying housing. Many believe that the high cost of living prevents them from starting their own families.
The shadow of the 2008 financial crisis
Many millennials have matured at the worst possible time – when the economy collapsed after the 2008 financial crisis. This downturn has dragged older millennials for years, making them the only age group to fall below expectations in terms of income and wealth in 2010, then fall even further in 2016, according to a study by the Fed of Saint-Louis.
The average millennial family born in the 1980s had amassed a median net worth of only $ 23,200 in 2016, 34% less than expected, and a median income of $ 51,200, 3% below projections, researchers say. from the Fed’s St. Louis Fed Household Financial Stability Center. found.
Those who did not have a university degree fared even worse. Their income was 9% below expectations and their wealth 44% lower. Likewise, black and Hispanic millennials generally have less wealth and income than their white peers.
More recent data from the 2019 Federal Reserve shows that the average wealth of millennials has never reached Gen X levels at the same age, said William Emmons, the center’s senior economist, though their incomes and rates savings have improved.
Student loans are part of the problem. Young families had an education debt of $ 1,415, on average, in 1989, according to a calculation by the Federal Data Institute for the Federal Reserve, which appeared to be people aged 18 to 29. This burden increased to $ 13,039 in 2016.
Another reason why millennials are poorer than previous generations at their age is that they have lower homeownership rates, which is often the key to building net worth.
According to a study by the Federal Reserve’s Government Accountability Office, only 43% of millennial households owned a house in 2016, compared to 51% of Generation X at the same age and 49% of baby boomers. data published in December.
Coronavirus pandemic, which killed more than 20 million jobs in April alone as states mandated residents to stay at home and non-essential businesses to close, threatens to roll back millennials .
“Young families are going to be under a lot of pressure from this experience,” said Reid Cramer, senior fellow at New America, who led the think tank’s Millennials Initiative.
The new success of the coronavirus
Brianna Garcia had hoped to get a better-paying job this spring, but the jobs she applied for disappeared after the coronavirus arrived in the United States. Although still employed as an administrative assistant in a medical clinic and her hometown of San Antonio, Texas, does not appear to have been hit as economically, the 26-year-old woman fears that she will face even more of competition once businesses reopen.
“There is already too much to deal with under normal circumstances, in addition to this additional pressure from the pandemic and the economy and its fragility,” said Garcia, who was the first of his family to graduate but cannot afford to leave their parents’ house. “I don’t really know what’s going to happen to me. “
Those who have good jobs want to make sure they keep them. The prospect of a deeper recession and a slow recovery is driving further layoffs beyond the initial cuts in restaurants, bars, hotels and entertainment.
Although he teleworks now, Scott Larsen works overtime and gets involved in additional projects in his work as marketing manager for a health and beauty business. He tries to make himself as vital as possible for his employer, who traditionally did not allow employees to work remotely.
However, he believes the economic turmoil caused by the pandemic is further delaying him in pursuing his career, saving for the future and buying a home. This is in stark contrast to his parents, with whom he lives in Payson, Utah. Although they are retired, they continue to feel financially secure.
“I wasn’t exactly in a great place to start and now I’m just going to walk on the water,” said Larsen, 29. “Now is not the time to ask for a raise. “
Some good news
Generation Y, however, has certain factors in its favor. They are more educated than previous generations and still have time to create wealth and income, as did Generation X after the Great Recession.
People born in the 1970s are now on the right track in terms of income, and although their net worth remains below expectations, it has increased significantly in the years following the financial crisis.
“They were fortunate enough to be young enough to really work harder and try to recover,” said Emmons.
For Sarah Clinton, the coronavirus epidemic has created new opportunities. A social worker, Clinton had long thought of caring for some private patients, but was generally too tired after driving up to four hours a day for her main job of counseling the homeless.
Now, however, the resident of Waltham, Massachusetts is working from home and has more time. In addition, there is a greater need for therapists these days because many Americans are struggling with depression and anxiety in the midst of the pandemic. She therefore joined a practice and will see several clients per week via telehealth.
The massive shift to telework triggered by the coronavirus could lead to even more dramatic changes in Clinton’s life. She and her husband wanted to buy a house but could not afford it in an area reasonably close to their work. Now that the two are working from home, they realize that they can explore cheaper areas further away.
“Maybe living in the middle of nowhere is fine, maybe we could telecommute,” said Clinton, 35. “I feel like we can dream a little more. There are more possibilities. “