The data on millennials' lifetime earnings potential were already fairly grim long before the word “coronavirus” became part of everyone’s daily conversations – and before the U.S. economy all but shut down to slow that pandemic’s spread.
A 2016 paper led by Stanford University Economist Raj Chetty found that millennials were in deeper economic trouble than a quick look at the U.S. economy would imply, and were unlikely to ever attain their parents’ earnings potential.
And as Karen Webster noted in a 2016 commentary: “The generation that made sriracha a food group and yoga pants a go-to corporate wardrobe staple ... the generation that every brand is desperately trying to woo is, by and large, broke.” She noted that 60 years of economic ebbs and flows since the mid-20th century have caused generational economic expectations to slide.
A child born in 1940 had a 92 percent chance of out-earning his or her parents over a lifetime. On the other hand, a millennial born between 1981 and 1996 has only a 50-50 chance.
The reduced expectations come as a direct and painful result of the Great Recession, which hit right as many millennials were completing their often expensive college educations and entering the workforce. Half of recent graduates were unable to find work when they left school during the recession, and the millennials’ formal unemployment rate ranged up to as high as 20 percent or 30 percent.
Many found themselves facing joblessness, low wages and stagnant earnings trajectories over the following decade. A major Pew study found that as of 2018, millennials with college degrees and full-time jobs were earning roughly what Generation Xers made in 2001.
And many millennials entered the workforce with an unusual weight dragging behind them: a staggering amount of student debt. That’s eating up their take-home earnings and slowing their passage through other life milestones, economics writer Annie Lowry noted in an interview with Vox.
“Millennials have racked up more than a half-trillion dollars of student loan debt. That has had the effect of depressing their take-home pay, and it’s made it really hard for them to buy houses, start businesses, start families, have children and so on,” she noted.
According to a 2018 Federal Reserve study, those difficulties have considerably slowed millennials' economic lives. They’re far less likely than their Generation X counterparts were at similar points in their lives to have bought homes, married, had children or begun saving for retirement.
“The severity of the 2007 global financial crisis and the recession that followed may have left a lasting impression on millennials who were coming of age at that time, much like the Great Depression left a lasting impression on the Greatest Generation,” the report noted.
And now, just as the Greatest Generation survived the depression and World War II, the millennials will end up bearing the brunt of two once-in-a-lifetime global events: the Great Recession and the COVID-19 pandemic. That will make it immeasurably more difficult for millennials to find a steady financial footing going forward.
“They’re walking a tightrope and there are cliffs on either side,” said Kathryn Edwards, a labor economist at the RAND Corporation. “It’s hard to imagine someone making it through both of these recessions in this age group really unscathed.”
Particularly for millennials like Aviv Russ, who graduated from Emerson College in 2009 right into the worst of the Great Recession. Russ told Fortune that he spent his first few years out of college scrapping for a series of low-wage/no-benefits production gigs. He recalls hearing the same discouraging message over and over again: “Dude, you missed the good years by like five years.”
A decade later, Russ thought he had escaped the worst of the financial difficulty, having managed to save up enough to contemplate buying a house. But that was before the 31-year-old, who worked in Hollywood, found himself knocked into joblessness again – this time by the pandemic. Savings that were once earmarked for a down payment on a home are keeping him current on rent.
Given the industries in which millennials have congregated since the Great Recession, the depth of the hit is understandable. According to recent reports, millennials make up the majority of U.S. bartenders, half of restaurant workers and a large share of retail workers.
Millennials also make up a big portion of gig and contract workers, at a time when tasks like ridesharing have ground to a halt, and the timetable of a recovery seems very much unknown. Even millennials with white-collar jobs who have shifted to working from home will still likely take a career hit.
Of course, millennials aren’t the only generation tagged by the crisis: Baby Boomers and Gen-Xers have also suffered two successive blows to their retirement portfolios due to spectacular market crashes a decade apart.
Chip Espinoza, dean of strategy and innovation at Vanguard University, worries that another recession means some Baby Boomers won’t retire on schedule, thus slowing millennials' professional advancement even further as older workers stay on the job.
“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,” Espinoza said. Millennials “will have to rent longer, cohabitate longer and stay in starter homes longer.”
So what’s next for a generation that has been dinged by two separate “once-in-a-lifetime” events – the first of which damaged their lifetime earnings trajectory and the second of which came just as many attempted to enter their prime earning years
PYMNTS’ consumer surveys indicate that millennials’ habits are already shifting. For instance, millennials as an age group are the most partial to making some of their recent digital changes into permanent shifts.
And it seems millennials might have other changes yet to make as they attempt to recover even more lost ground – and could find ways to insulate themselves from the next “once-in-a-lifetime” event that reality might throw their way.