According to the I.M.F., the coming COVID-induced recession will be the worst downturn since the Great Depression. As of this week, 22 million Americans have filed for unemployment, proving the sweeping effects of COVID-19 on the economy. However, these effects are already different across the generations. What are those differences and how will they play out across the projected economic outcomes of COVID-19? We've broken it down for you.
With the youngest members of the Silent Generation being around 75 years old, many members of this generation are already living off investments and may become penny pinched, or at the very least feel penny pinched, as parts of their portfolio lose value. This new income reality, tied with shifting perceptions of the safety of nursing homes and care facilities, may lead more of the Silent Generation to age at home and become a greater liability to their Boomer or Gen X children.
Baby Boomers are a diverse generation, ranging in age from 74 to 56. According to Forbes, the majority of Boomers are still in the workforce and plan to remain in the workforce longer, if the economy allows. Younger Boomers are already behind their older counterparts in accumulating wealth in IRAs and 401(k)s due to the 2008 recession in their 40s, according to a recent study by the Center for Retirement Research. They will likely continue to fall behind and remain in the workforce as a result.
However, as Forbes mentions, Boomers face unique barriers to finding and retaining jobs due to ageism. Those who have already retired — or who will retire soon — will face the same psychological strains as the Silent Generation and may change their consumption patterns. Those who retire without the money they had planned due to job loss or other factors may apply to Social Security early, lowering their monthly benefits and overall Social Security income.
Gen X, who's members range in age between 54 and 40, has still not recovered from the recession of '08, when many of them foreclosed on homes, lost jobs at the height of their early career and lost out on prime years of investing in order to keep food on the table. Another economic downturn will likely result in an extension of their time in the workforce as they continue to invest at only a modest pace, if at all, while also spending their funds to keep their Millennial and Gen Z children afloat. Leisure consumption will drop and serious considerations will be made about their life path. Robert Glazer, a contributor at Forbes, says he expects a lot of voluntary and involuntary career changes for Gen X as they shuffle around their priorities to keep all of the wheels moving.
Millennials, arguably the only generation left worse off than Gen X by the 2008 recession, range in age between 24 and 39. As many commentators have pointed out, Millennials were left flattened by the '08 recession in their youth, with many of them laid off in the earliest stages of their career or graduating into an unkind market. They lost out on prime investing years, home ownership and the ability to pay off increasingly large (and growing) amounts of student debt.
This initial instability only looks worse when paired with the current affordability crisis, best illustrated by the fact that people between 25 and 34 make only $29 more annually compared to their age counterparts 1974, when adjusted for inflation, compared to a $5,400 increase for people between the ages of 45 and 54. Younger millennials will likely "bear the brunt of a slower job market," according to Business Insider, as lower seniority employees get laid off and young professionals miss out on initial promotions and pay raises. Meanwhile, older millennials — many of whom are strapped with student debt, personal debt and, if they own a house, mortgages of over $100,000 — are in for troubling time if they're laid off.
Gen Z, ranging in age between 23 and 8, will obviously be impacted in diverse ways, as some of them are members of the workforce while others are in elementary school. Younger members of the generation are attending school online, if at all, which some experts say may cause the need for remediation in order for American students to keep up with international standards. Lower-income students' parents are especially concerned that their children are falling behind, potentially impacting their future higher education and career prospects.
College students are also facing education restrictions as their semesters move online, which may reverberate through the rest of their university experience, and will face increasing difficulty landing early professional development opportunities like paid internships as companies cut spending. Those graduating from college will face similar difficulties landing their first job at a fair price, reminiscent of what many millennials faced during the 2008 recession, potentially setting back their lifetime earning potential and career trajectory. The same goes for Gen Zs already in the workforce, who represent the youngest members of most workplaces.
Our employer partners are actively recruiting women! Update your profile today.