Researchers say the ‘Pandemic Recession’ has set the finances of the Millennial Generation into a tailspin.
“Millennials are old enough to have been negatively affected by the Great Recession. But we’re also young enough to still be early to mid-career still when the COVID-19 pandemic hit,” says Ana Hernández Kent, a Policy Analyst at the Federal Reserve Bank of St. Louis. “What this means is that we were economically vulnerable going into the pandemic – moreso than older generations.”
According to Kent, the factors which have impacted Millennials include income levels stunted by the onset of the Great Recession, higher home prices which outpaced salaries, crushing student loan debt and the added burden of health care costs to tend to the needs of the previous generation.
Kent says she fears Millennials are on course to become a “lost generation” when it comes to financial stability brought on by changes in the modern business environment.
Anuj Nayar, a Vice-President and U.S. Financial Health Officer at Lending Club, says Millennials choose to pay down debt and adds that financial institutions need to keep that priority in mind when they work to service customers in that age range. He says that viewing Millennials as a viable market for credit cards is a mistake.
As of the July 2020 U.S. Census, data reveals that there are now more Millennials across the nation than there are members of the Baby Boom generation and that Millennnials now make up the largest segment of demographics in America. The Pew Research Center says Millennials are people born between 1981 and 1996.
The pandemic has delivered a much harder hit to Millenials as seven out of ten say they have been impacted as opposed to just over half of all Americans who say they’ve been impacted by the COVID-19 pandemic.
Some 86% of Millennials now say they’re seriously concerned about their ability to pay their bills and loans, that according to TransUnion. Among the, 40% of Millennials say their biggest worry is their ability to pay credit card debts. TransUnion also revealed that their research found members of the Millennial generation were most like to seek and receive credit relief during the COVID-19 outbreak. The Financial Health Network says their barometer of financial stability, they call it the Financial Health Pulse, found that just 24% of Millennials ranked as “Financially Healthy,” and that survey predated the outbreak. Financial Health Network says they define “financially healthy” as consumers being able to meet conditions like savings, responsible spending, access to borrowing and the ability to plan for unexpected expenses.
The study found that just 54% of Millennials were classified as “Financially Coping” before the pandemic and that 22% were classified as “Financially Vulnerable.”
Unemployment has also slammed Millennials.
A survey conducted this year by a major accounting firm found that one out of five Millennials worldwide have been put out of work and that one in four between the ages of 25-30 have lost their jobs entirely or been ‘furloughed.’ An additional one in every four Millennials said they were working fewer hours and just one in three Millennials said their employment and income status remain unaffected.
As a mitigating factor, many Millennials favored use of mass transit and ride sharing, but while that had a positive impact on their finances, health concerns have added a layer of complexity to that preference as researchers say many have expressed a preference for personal transportation with current health concerns as a driving factor. The researchers also found that 35% of consumers surveyed say they were considering buying cars and 45% of those under 35 were thinking about a purchase, those numbers could shift dramatically as the pandemic continues. Perhaps most alarming is the finding that more than half of younger people say they’re not in the market to buy a car because they can’t afford one or the attendant costs which come with them such as insurance and maintenance. Of those surveyed, 57% of people aged 18-24 and 51% of people aged 25-35 said personal transportation was just too expensive to consider.
The Pew Research foundation also found that just 44% of Millennials were married in 2019, and that compares to 53% of Generation X members and 61% of Baby Boomers.
Contrast those numbers with the 81% of Silent Generation members who were married at a comparable age, and the shift marks a significant departure from past generations.