Despite the difficulties they faced entering the job market during the worst recession in decades, millennials have found their way into the workplace, even teaching older generations a thing or two about new ways to work along the way. But, financially, it’s been a rough decade or so for the youngest generation of workers.
(Photo Credit: Moyan_Brenn/Flickr)
All generations were impacted by the Great Recession, but millennials may have had it the worst. They shouldered crushing student loan debt as they vied for a scarce spot in the labor market, only to find low pay and staggeringly long hours once they landed one. As a result, many millennials have delayed personal and financial milestones such as marriage and home ownership, and they’re even staying at home with family longer than young people have in about 75 years.
So, it’s not difficult to understand why millennials may be feeling a little less than optimistic about their likelihood of getting ahead once they’ve finally caught up. And, sadly, they might be right. Let’s take a look at a few obstacles facing millennials to try and understand their financial situation now and how it’s likely to evolve in the years to come. Here are a few things to consider.
Millennials’ new American dream of being able to move out of their parents’ homes and achieve financial independence (and maybe even security someday) is pretty tough to envision, given the current state of the middle class. This economic group has been the majority in the U.S. for more than four decades, but now they are matched in size by the groups above and below them. Additionally, middle-class Americans have lower median income and lower median wealth than they did at the start of the new millennium. It’s no wonder that millennials are concerned about the possibility of being able to achieve middle-class status, and being able to thrive if they do ever get there.
Despite their abundance of education, American millennials’ job skills don’t measure up, according to research done by the Educational Testing Service. Millennials in the U.S. ranked 15 out of the 22 participating countries in literacy, came in last in numeracy (tied with Spain and Italy), and ranked last (alongside three other countries) in problem-solving in tech-rich environments. As the global economy expands, it becomes increasingly important that our young workers feel they can compete – and that’s not exactly the case these days. Despite their best efforts to get a great education (and their willingness to absorb the accompanying debt) millennials, through no fault of their own, are struggling to keep up with workers around the world.
Millennials are the most educated generation in history. Unfortunately, they also have more student loan debt than any previous generation. Although most graduates still feel their degrees were well worth the cost, there is no doubt there’s a bit of a burden to bear here for young grads. On top of their debt, millennials (alongside the rest of the country) are dealing with wage stagnation despite an improving economy. Thus, getting ahead starts to feel like more and more of a pipe-dream.
4. It’s hard to get ahead when you can’t catch up.
Entering the workforce during the worst economic downturn in decades had a big impact on millennials, and it’s going to be hard for them to make up for lost time as they move forward. Their delayed entry into the housing market could be hurting the economy at large, and it might not be the best thing for millennials in the long-term, either. Their financial reality is marked by high unemployment rates, low savings, and low credit scores. Reversing these trends will take time. It’s hard to think about getting ahead when you’re still trying to catch up. And, that’s exactly what a lot of millennials are focused on these days.
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