Millennials and money: How the COVID-19 pandemic affected millennials financially

The financial impact of COVID-19 has tremendously devastated the millennial generation following the previous decade’s recession.

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Digital generated image of financial line chart showing fallings because of coronavirus COVID-19 on blue background.The financial impact of COVID-19 has tremendously devastated the millennial generation following the previous decade’s recession. In the wake of the novel coronavirus, many Americans are dealing with substantial negative financial impacts. Even though organizations, employers and the government are working diligently to maintain some form of financial stability, the generation who may suffer the most are the millennials.

University of Alabama at Birmingham Associate Professor Peter Jones, Ph.D., in the College of Arts and SciencesDepartment of Political Science and Public Administration, says it is important to remind people that older millennials were also affected by the 2001 recession, though the Great Recession and the current recession have been more impactful.

The pandemic crisis is occurring a decade after millennials were hit by the Great Recession. With that recession, millennials were either graduating from college and trying to find work, had found work but lost their job, or kept their job but were unlikely to get raises or negotiate for better pay because they had little leverage.

“With this current recession, millennials — especially younger millennials — were more likely to lose their job than were older generations,” Jones said. “And since millennials are more likely to rent than older generations, the looming eviction crisis will be worse for millennials, too.”

In the background is that millennials entered college as tuition rates were significantly increasing. Tuition has risen for several reasons, including states’ defunding higher education, and this rise in the cost of college means many millennials have a substantial amount of student loan debt, which has made saving more difficult. For many industries, employers are not offering the same level of benefits that older generations enjoy — great pensions, health insurance, etc.

“So even when the stock market does well, millennials are not benefiting as much, as compared to older generations at the same point in their lives,” Jones said. “I think it will take some structural changes to the economy to help millennials regroup.”

Jones says he believes two things can potentially save millennials: “One, they still have a few decades before retirement, and a lot can happen in that time, and two, they’re now the largest voting bloc, passing the baby boomers this upcoming election.”

COVIDmoney3Peter Jones, Ph.D.Jones has recommendations for millennials who are trying to regroup:

  • Restructure your debt if you can to take advantage of lower interest rates
  • Work on paying down debt and building up savings
  • Vote and pay attention to what is happening at the local and state levels of government

While more than half of Americans are invested in the stock market, most of these individuals are invested via a retirement plan, so while they are reaping some benefits from the rising stock market, their gains are much lower than those in the top income and wealth decile.

“It is also a great time to buy and sell,” Jones said. “While interest rates are low and it is a great time to get a mortgage, many millennials are too hampered by student debt or high rent to be able to save a substantial amount for a down payment. For those who were not in a good place financially prior to this recession, this is not a great time. Many millennials fall into this category.”