Millennials, Burdened With Debt, Are Now Facing Their First Economic Crisis

The last time a serious economic downturn hit in 2008, Evan Schade was in high school and the crisis seemed like a news event that happened to other people. This time, as the coronavirus has brought the economy to its knees, it has become a personal affair.

When nonessential businesses were closed last month in Kansas City, Mo., where he lives, Mr. Schade, 26, lost his job at a carpet store and almost all of the shifts in his second job at a coffee shop. His girlfriend, Kaitlyn Gardner, 23, was laid off from a different coffee shop.

The money they have in their bank accounts, just over $1,000, is enough to cover only this week’s $800 rent check — forget about his $300 student loan payments or the health insurance he was hoping to finally sign up for. The couple have spent their time at home applying for unemployment and fruitlessly looking for new work.

“I know so many people my age who are going through the exact same thing,” Ms. Gardner said.

The youngest American adults are facing what is, for most of them, the first serious economic crisis of their lives. By most measures, they are woefully unprepared.

While the last few years were largely good ones for the American economy, that did little to help set millennials up with a solid financial foundation. Overloaded with credit card and student debt, and underrepresented in the housing and stock markets, they entered this uncertain period with significant obligations and few resources.

Their position looks doubly precarious when measured against older generations today and relative to those generations when they were the same age, from 23 to 35 years old.

Going into the financial crisis of 2008, Generation X was roughly the same age as millennials today, but had on average twice the total assets that millennials have now when all bank accounts, stocks and loans are added together, according to an analysis done for The New York Times by economists at the St. Louis Federal Reserve.

Now members of Generation X, who are from 40 to 55 years old, are in a strong position relative to millennials, even after being battered by the 2008 crisis. They have about four times the assets and more than twice as much in savings as today’s youngest American adults.

“Even going into this situation, young adults were in a very precarious situation,” said Reid Cramer, who led the Millennials Initiative at New America, a left-of-center think tank. “A sudden shock is really going to have a pretty big impact on this generation.”

The turmoil caused by the coronavirus has already brought out other generational divisions. College students partying on Florida beaches have earned the ire of older Americans who face graver health risks when youthful gatherings spread the virus.

But while young adults may face fewer health problems, they are more vulnerable to the financial costs of the downturn. Millennials are much more likely to be involved in part-time work and the gig economy, according to government reports, and these have been hard hit. Such work generally provides few benefits to cushion the blow of bad times.

The sudden disappearance of paychecks, combined with a wide array of monthly debt payments and the declines in any investments, is forcing some millennials to take desperate measures. Social media has been filled with discussions about how to best take money out of 401(k) retirement accounts to pay for rent.

Dan Gamez, 22, who lives with his parents near Boston, has been selling his video game consoles on eBay to make his upcoming car payment after losing his job at an AT&T store.

“I’ve just been staying at home and playing video games, so I’m kind of upset I have to do this, but I have no choice,” he said.

Andrew Lawson, 29, was making $500 to $600 a week delivering food for DoorDash on Hawaii’s big island. After the state shut down nonessential businesses, most restaurants closed. In three days of work in one week, Mr. Lawson made less than $60, which wasn’t enough to cover the gas to get to Kona, the city with the work.

“Nowadays I might get a $5 order from McDonald’s after three hours of waiting,” he said.

Mr. Lawson has a 2-year-old and a pregnant wife, who does not work. They were down to eating plain noodles until he visited a food bank and got a bag of potatoes and some carrots. He has set up accounts on all the social networks to broadcast his need for work — any work.

“Give me something I could feed my family with,” he said. “I don’t care what it is.”

While the minority of young adults who have college degrees are doing just as well or better than previous generations when they were in their 20s and early 30s, those without a college education — like Mr. Lawson — are doing significantly worse, according to a Pew Research Center analysis last year.

The inequality among millennials is even more evident when race is taken into account. Young black families at all educational levels have fallen further behind their white peers over the last two decades in measures like household wealth and homeownership, according to research from New America.

“Over time, it is becoming more difficult for young families to accumulate wealth,” said William R. Emmons, the lead economist at the St. Louis Federal Reserve’s Center for Household Financial Stability. “We thought maybe they’d catch up later, but the current situation doesn’t give me much reason to believe that’s going to happen.”

These disadvantages are already shaping the long-term prospects of young Americans. They are much less likely to be married, have children or own a house than Americans of a similar age in decades past.

Ms. Gardner said that she and Mr. Schade eventually wanted to have a family and a house. But she said, “We’re both going to be in debt for a while, and having kids is just not feasible.”

While there is a chance the downturn will be short, economists are assuming that the turmoil that has already happened will have long-term consequences for young households.

The 2008 crisis made young Americans then more reluctant to invest in the stock market. Millennials today have, on average, only a third of the stock market holdings that Generation X did before the 2008 financial crisis, according to the data from the St. Louis Federal Reserve.

That means that young households have not enjoyed the market gains that came over the last decade. Today, the average member of Generation X has 10 times more wealth from the stock market then millennials.

Jack Ankenbruck, 25, who until last month made a living playing drums in a band in Nashville, began putting money into an investment account with the start-up Acorns last year and had gotten it up to $2,000 by February. The value of the account plunged by almost half in recent weeks, making him question his decision to put it there in the first place.

“I’m thinking, ‘What if I’d just kept that $30 a week — I’d still have that money,’ and I could use it now,” said Mr. Ankenbruck, who has been trying to make some money playing concerts online.

Jayci Cumberledge, 23, in Amherst, Ohio, has no retirement accounts and spent her last $80 in savings to make her monthly car payment shortly after the gastro pub where she worked closed in mid-March.

Ms. Cumberledge’s parents have also lost their jobs in the last few weeks — her father at a Ford factory, her mother driving a van for disabled children. That has made her aware of how much better prepared they were for this, she said, with a house they own and no rent payments to fall behind on.

To cover the utility bills for her mobile home, Ms. Cumberledge borrowed $200 from a friend. She has since made some money by selling pictures of her feet to people with fetishes who found her online after she put a joking post on Twitter.

“You compare it to the older generations — they worked up and saved money,” Ms. Cumberledge said. “It feels like I’m never going to have a stable job that has benefits and health insurance.”

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