The COVID-19 induced recession may have just delivered the biggest economic blow to young people, especially Millennials
Throughout the duration of the coronavirus, it has become clear that the effects of the virus are being borne disproportionately. Older people and people with pre-existing conditions seem to make up a majority of COVID-19 deaths. Small businesses have made up a huge number of most permanent business closures. And when it comes to job losses, low-income individuals have been hit the hardest with job losses.
When it comes to economic outcomes, young people have been the most heavily affected groups. Additionally, they stand to face economic hardships for many more years to come. Millennials specifically have faced two economic downturns in their lifetime and stand to remain the biggest economic casualty from the virus. Older individuals, while heavily affected by the virus, are not a huge part of the labor force and therefore did not face significant economic disruptions.
Millennials and recessions
During the 2008/2009 great recession, the majority of millennials were just about a few years into the workforce, entering the workforce or finishing up college education. Millennials spent a big part of their building years, facing high unemployment. This has been a defining period for the economic wellbeing of the average millennial. According to data, compared to prior generations, are less wealthy compared to previous generations at their age. Generally, people in their 20s and 30s have low levels of home ownership, net worth as well as real income.
The corona virus-induced recession is therefore a second recession for Millenials. And it has come at a time when Millenials were starting to catch up from the financial woes of the great recession. So Millenials had a very thin financial cushion compared to other generations when it came to the corona virus-induced recession.
So, even when we take into account the fact that Millenials are a diverse group in age and most of them are much more mature, Millenials are not immune to the impact that coronavirus has had on the economy. In fact, they have still been part of the group heavily more affected by job loss. And they have been hit especially hard financially due to already existing financial issues.
Young people and COVID
Young people have faced the highest job losses during the corona virus-induced recession. They, therefore, stand to face the most economic hardship out of this. Additionally, this also means that they will have difficulty gaining experience. This is especially true for the ones just entering the workforce. And if young people cannot gain experience early on in their life, their career prospects will be negatively affected and so will their economic wellbeing.
For young people in college, entering the workforce at a time of recession not only decreases their chance of employment but also decreases their chance of getting a high-paying job even further. And lower entry-level earnings put a lower limit on people’s overall lifetime earnings. According to some research,
People who enter a labor market with high unemployment typically see a 10% hit to income in the first year, with the effect averaging out to a 1.8% reduction in yearly earnings over 10 years, according economists at Yale and the University of Rochester. They also found the impact of the Great Recession on wages to have been “much larger” than previous downturn
||Unemployment rate 2020
|16 to 17 years
|18 to 19 years
|20 to 24 years
|25 to 34 years
|35 to 44 years
|45 to 54 years
|55 years and over
Source: Bureau of Labor Statistics
School closures will compound effects for low-income students
Young people have also been affected by school closures. School closures have an adverse impact on learning. Kids who fall behind on learning usually never make it up, and this may affect their overall level of education. This risk is especially high with low-income students who do not have enough resources to access online learning resources. In a long time, loss in learning translates to a loss in future earnings, something which will affect most current students.
But already disadvantaged kids will be at most risk.
Whenever schools return, researchers say, the likely result is a generation of students forced to play catch-up, perhaps for years to come. Most vulnerable are those who are always the most vulnerable: homeless children, those living in deep poverty and students with disabilities. While some students are adapting to distance learning, others are struggling to find quiet spaces to study, lack reliable Internet access or must care for younger siblings during the day, among other barriers.