Statistically speaking, 28-year-old graphic designer Amy Norris is something of an anomaly. Twenty-eight percent of her fellow millennials don’t hold full-time jobs, but she has steady employment at Quartermaster Marketing.
While studies reveal that many millennials are putting off big life changes like getting married, buying homes, and starting families because they’re paying off hefty student loans, Norris graduated owing less than $2,000.
Census statistics show that about 28 million out of 70 million millennials in all are not enrolled in school and are making less than $10,000 a year at their jobs.
Recessions tend to affect young people the hardest. But members of the country’s largest generation have been waylaid far worse than previous generations, and economists worry that those effects on a group just now starting careers could linger for decades.
“The financial crisis and the Great Recession and its aftermath are hopefully the most significant economic calamity that this generation will experience,” said labor economist and policy analyst Catherine Ruetschlin, a visiting professor at the University of Missouri-Kansas City.
Wage inequality is a particular scourge for millennials. It’s difficult to say why so much money rests in the hands of an elite young few because there hasn’t been much study of it in this age group.
Given that so many millennials are making less than $10,000 a year, a salary of about $60,000 would place someone in the top 10 percent of potential earners among millennials, Fusion.com concluded.
“In America, the quintessential premise of the American dream isn’t that anybody can get rich, because that’s never really the case,” Ruetschlin said. “It’s that anybody who works hard, plays by the rules — you get up and go to work every day and you bring home your paycheck and you act prudently with it — can have a stable and satisfying life.”
As a paraprofessional, 26-year-old Taylor Stoetzer of Mission, Kan., spends his days working with special-needs children in a field he’s long been interested in. Given that so many people are struggling to get by, “I would say I’m definitely not making a ton of money right now, but I’m definitely blessed to be where I’m at,” he said.
His job doesn’t require a degree, just a number of college hours. But even millennials with degrees aren’t finding jobs, as a May headline in Forbes declared: “The 5.4 unemployment rate means nothing for millennials.”
“This misconception that we don’t want jobs or that we’re lazy and entitled is nonsense,” David Pasch, 26, a spokesman for Generation Opportunity, a conservative nonprofit that advocates for millennials, told Time earlier this year.
Millennials trying to enter the workforce or looking to move into better-paying jobs face stiff competition, Ruetschlin said. “It’s kind of that last in, first out trend,” she said. “They have to heavily compete for jobs with people with much more experience in the workforce, which sets them back.
And the millennials who do have college degrees? They’re starting their careers with bigger student loan debt than previous generations: a nationwide average of $30,000 as of three years ago.
That cumulative debt rose above the $1 trillion mark for millennials last year, making it the group’s second-largest category of household debt, according to the “15 Economic Facts About Millennials” report from the White House Council of Economic Advisers.
Several factors are to blame. There’s a larger number of students from lower-income families going to college who need to take out loans to pay for school. Financially strapped parents can’t as easily use equity in their homes to pay for college anymore. And students are taking longer to repay their loans, if they do at all.
“Everyone has kind of acknowledged that a college education is the best way to work toward a better life, of finding that secure place in the middle class,” Ruetschlin said. “This is a largely agreed-upon social good.”
Nearly every millennial plans to buy a home someday, a Fusion.com survey revealed. But that’s another goal that appears out of reach for many. For one thing, a growing overall demand for inexpensive, starter homes has diminished the supply available to younger Americans with less money to spend.
“You’ve got the front end of a big wave of first-time homebuyers, but the supply of affordable housing is not there to meet that wave,” Sam Khater, deputy chief economist for CoreLogic, told Bloomberg News recently.
That millennials are less likely to own homes, aren’t “even comfortable setting up their own households as renters, that has consequences,” Richard Fry, a researcher at the Pew Research Center in Washington, also told Bloomberg.
“I am concerned that the decline in home ownership is secluding millennials from building wealth, at least in the traditional American way. There’s at least a warning flag out there.”
Even with the deck so perilously stacked against them, millennials believe they can be wealthy, even millionaires. In fact, more than 25 percent of them expect to be millionaires in their lifetimes, according to Fusion’s Massive Millennial Poll.
Keep in mind, a lot of those millennials are still living with dad and mom. Millionaire status is far more doable for older Americans.
If you’re over 62, your odds of having at least $1 million in net wealth (total assets minus total debt) are about one in seven. Under 40? Your odds are one in 55. Over the last 25 years, the odds have gone up for older folks, down for younger.
“Millennials are either impressively optimistic or blissfully ignorant,” Fusion concluded.
If young people want to close their income gap and increase their chances of being wealthy someday, one strategy is to copy what older people do, economists at the Federal Reserve Bank of St. Louis, MO advised this year after researching the role that age plays in how much people make and how much wealth they accumulate.
As the bank’s economists pointed out, older workers typically have more diverse investments, less debt and more money stocked away for emergencies than younger people.
So their advice for young working Americans? Stash away an emergency fund, pay down debt, avoid high-cost credit and put money into higher-returning investments.
