The Covid pandemic has been a perfect storm in terms of the potential damage it is inflicting on young adults, according to a new survey.
One in four young adults report that the pandemic will have a lasting negative impact on them financially, according toa national survey of 2,280 young adults, ages 18-39, conducted by Georgetown University Business for Impact’s AgingWell Hub, part of the McDonough School of Business, in partnership with Bank of America and Transamerica.
The survey found that 25% of adult Gen Zers (ages 18 to 23) and 35% of millennials (ages 24 to 39) had spent savings or delayed saving or paying off debt as a result of the pandemic.
“This survey makes clear that millennials and Gen Z are very concerned about the impact the Covid-19 pandemic will have on their lives, both in the present moment and in the future,” Kent Callahan, CEO of Transamerica’s Workplace Solutions said. “While the lack of optimism is understandable, these survey results also make clear that our role helping people achieve a lifetime of financial security is critically important, now more than ever.
Young adults' outlook for the economy a year from now is also dismal, with the majority of Gen Z (59%) and millennials (53%) reporting things will be worse than or only as good as today. Gen Z students have the lowest expectations for economic recovery.
Similarly, Gen Z respondents express lower levels of optimism about where American society is heading compared to millennials. Students registered the lowest level of optimism, with only 11% believing next year will be better.
Even before the pandemic, financial security was a challenge to Gen Zers and millennials due to a number of factors, including ballooning college costs, a weak job market, wage stagnation, house costs that have outpaced inflation and lack of access to employer-sponsored retirement savings.
One reason for financial disruption is the rising unemployment rates among younger Americans. Gen Z and millennial unemployment hit 25.3% and 12.5%, respectively—much higher than levels for Gen X and baby boomers, the study found. That is partially because of how hard hit the leisure and hospitality industry has been, which has a median worker age of 31.9 years.
The survey also found women were less optimistic than men on the country’s prospects for economic recovery. While 40% of men believe things will be better a year from now, only 25% of women share that optimism.
Gen Z and millennials also reported being saddled with high debt levels. From 2015 to 2019, total credit card debt for millennials grew nearly 40% while debt for baby boomers grew just over 1%. “Managing debt as a constant line item means less ability to save for retirement and other life milestones such as buying a home,” according to the survey.