Millennials, Gen Z Hit Hard Financially

Everyone knows that seniors are being hit hard by the pandemic. The risks of serious illness and death are more significant for those over 65, and isolation can be especially hard on the elderly. That element is compounded by strict safety precautions in nursing homes and other residential facilities populated by older Americans. In addition, there’s an obvious tendency for older populations to be less connected through technology.

But seniors aren’t the only ones facing troubled times. Millennials and Gen Z are facing their own special challenges, both during and after this pandemic. Many of those challenges are financial.

Job Loss by Generation

When shutdowns and other pandemic-related factors cost tens of millions of jobs around the country earlier this year, younger workers were hit hardest. According to data from Pew Research Center, 25% of workers under the age of 25 lost their jobs during the early round of layoffs and business closures. The same was true for 13% of employees aged 25-34. 

Both of those rates reflect much more widespread job loss than during the Great Recession, when 15% of the youngest workers and 6% of those in the 25-34 bracket lost their jobs. About 30% of Millennials surveyed said they’d taken a pay cut during the recession caused by the COVID-19 pandemic.

One reason young workers were hit harder is that nearly half of the under-25 workforce was employed in industries considered high risk - these include food service, hospitality, and retail services. That’s about double the rate for older workers.

These industries were more likely to be shut down or partially shut down by government orders, are more likely to see a decline in business even when they are allowed to open, and are generally not adaptable to remote working arrangements.

Racial Minorities Have Been Hardest Hit

A separate report issued by the Economic Policy Institute (EPI) revealed that the impact was even greater on non-white younger workers. In the spring of this year, the unemployment rate for Asian American/Pacific Islander workers under 25 was 29.7%. Young black and Hispanic workers followed closely, at 29.6% and 27.5%. 

Underemployment Also More Common Among Young Workers

Many younger workers around the country were underemployed before the pandemic. The underemployment figure takes in not only those statistically counted as unemployed, but also those who are unemployed but have given up looking for work and those who want to work full-time but have only part-time work. In other words, the youngest sector of the workforce was already on less-than-stable ground before the pandemic.

According to EPI, more than 15% of workers aged 16-24 were already underemployed in 2019, compared with less than 6% of those aged 25 and older. In 2020, those figures have increased to 35% for the 16-24 age group and 18.3% for workers older than 24. Like unemployment, underemployment is even more widespread among younger workers who are black, Hispanic, or Asian American/Pacific Islander. Among these groups, the age 16-24 underemployment rate is about 40% in 2020.

Pre-Pandemic Factors Increase the Impact on Younger Generations

Gen Z workers haven’t just experienced higher levels of job loss and underemployment than older generations. Their ability to rebuild may be impacted by their relative lack of experience. When a business downsizes and has to rely on fewer workers, it’s natural to seek out the workers who can offer the most value and operate most independently. Often, that means retaining workers with more experience and laying off those with less.

Because younger workers generally have fewer years in the workforce, they’re also less likely to have built up a significant safety net to carry them through a period of unemployment. In addition, they were most likely to be affected by the retraction in consumer credit that resulted in the closure of tens of millions of credit card accounts this spring and summer.

Still, Pew says it’s Millennials who are ultimately hit the hardest. Millennial respondents to their survey were more likely than any other generation to say the pandemic had a significant impact on their finances. 39% described the impact as “major.” That’s compared with 28% of adults across all age groups and just 17% of Baby Boomers. 

That’s partly because this is not the first recession many Millennials have weathered. The lines are a bit fuzzy as to where Millennials end and Gen Z starts, but Pew draws that line at 1996. That means the youngest Millennials turn 24 in 2020. They were in middle school when the Great Recession struck. But the situation was very different for those born between 1981 and 1990. 

At the time, this group of Millennials was graduating from high school, graduating from college, entering the workforce, or had just a few years in the workforce. Many were seeking their first jobs during a period when 8.7 million jobs were lost. It wasn’t until 2014 that those jobs were fully recovered, and it took another two years for median household income to reach 2007 levels. In short, all but the youngest Millennials had already spent much of their working lives in a period of recovery and rebuilding.

These challenging circumstances also meant home buying was rarer among this group than previous generations at the same age, and many were behind on savings and retirement planning. Many Millenials have already given up on buying a home, resigned to renting for the foreseeable future. 

Nathan Rester, Associate Attorney in our Jackson office, puts it like this:

“I’m the youngest person in the office, so I guess that makes me the Resident Millennial. Hardly anybody I know has purchased a home. The money isn’t there, the market isn’t there. I have married friends, bachelor friends, friends with kids. Even if you’re doing well financially, why play Russian Roulette with a mortgage? We’ve grown up with the threat of recession looming over our heads, all day, every day. We’ve been conditioned to understand that money comes, money goes. And you better be ready when it goes.”

Some Parts of Alabama Hit Harder by Job Loss

Alabama’s job loss and recovery during the pandemic hasn’t been a straight line, and different areas of the state have been impacted more heavily than others. Several areas hit highs in April saw unemployment rates drop until August, and then started to climb again in September. For example: 

• The Birmingham metro area peaked at 11.9% in April, dropped to 5.5% by August, and then climbed back to 6.1% in September.
• Florence peaked at 15.3% in April--higher than both the national and state averages. That rate dropped to 5.3% by August, but was back up to 5.8% in September.
• Gadsden reached 19% unemployment in April, dropping to 7.0% in August and back up to 7.6% in September.

In some areas, recovery was slower before reversing course. For example, after an April peak of 15.1%, the Mobile metro area was still at 8.3% unemployment in August. By September, the rate had climbed back to 9.3%.

Start Educating Yourself Now

Many Alabama workers, particularly young adults, have a difficult road ahead. And, as the metro rates above show, it’s not yet clear when we can expect employment to stabilize. If you’re still unemployed or have less income than you did pre-pandemic, it may seem impossible to take positive steps. But, the more you know, the better prepared you’ll be to minimize harm and put yourself in a better position to rebuild. 

That means educating yourself about programs that may assist with rent and other expenses during the pandemic, talking to creditors about deferral programs or other options that may give you some breathing room and mitigate damage to your credit, and prioritizing your debts and expenses. For some, it will also mean recognizing that debt has spiraled out of control and a more powerful solution is required. 

At Bond & Botes, we’ve been helping people resolve debt for decades. We have a unique understanding of the challenges an extended period of income disruption can create, and want to ensure that you have the information you need to regain control of your finances. That’s why we offer free, no-obligation consultations to people struggling with debt in Alabama, Mississippi and Tennessee. 

You can schedule yours right now by calling 877-581-3396 or filling out the contact form on this page.