Millennials Suffer Their Second Economic Crisis
This week, we talk about how the coronavirus pandemic has hit the fortunes of millennials.
Welcome to our weekly chat about the environmental and social issues that influence the way we work, spend our money and live our lives. We're your hosts, Maitane Sardon and Dieter Holger. Want to get our newsletter every Wednesday? Hit the subscribe button in the upper right corner and please share with your friends!
Did you know that the economic fallout of the coronavirus pandemic in the U.S. is hitting millennials harder than other generations? Since the crisis started, 4.8 million people born between 1981 and 1996 have lost their job, according to the Federal Reserve Bank of St. Louis. Data from May by the Pew Research Center shows the 12.5% unemployment rate among millennials is higher than their parents, who are often baby boomers—those born between 1946 and 1964. There are also more millennials unemployed than Gen X, who are born between 1965 and 1980. One reason for this is that many young adults work in industries that have been hurt by the pandemic’s lockdowns, like leisure and hospitality.
That doesn’t surprise me since millennials were already in a weaker position than older Americans when the crisis began. After all, they were entering the job market or in early careers during the 2008 financial meltdown. You wrote in March that millennials are less well off than earlier generations when they were young. They have lower incomes, fewer assets and more debt than the baby boomers and Gen X had at the same age, according to Deloitte.
When I wrote the article, just before the pandemic started, I spoke with many millennials who told me that they were putting off big milestones like buying homes or having children because of financial uncertainty. They also told me they wanted to invest but they didn't have extra cash to do it and lacked the knowledge. Some experts say this crisis could add to their hesitation in entrusting the money to the market and keep them from accruing the wealth their parents and Gen X gained.
That’s troubling news since it looks like the pandemic isn’t going away any time soon. The number of coronavirus cases worldwide has surpassed 20 million. On a more encouraging note, the U.S. reported Tuesday fewer than 50,000 new cases for the second day in a row. Are there any other signs of the pandemic, Maitane?
We saw a surge in prices among coffee, cocoa, cotton and sugar this week. These are called soft commodities because they are grown instead of mined like metals. Prices on exchanges for the raw ingredients of clothes and chocolate have returned to positive territory after falling during the pandemic. One reason prices are going through the roof is because the crisis has strained supply chains, but demand is still there. For example, Brazil is one of the world’s top suppliers of coffee and sugar, but is also one of the countries suffering the most from the pandemic.
What am I looking at? The chart above shows the prices for futures contracts of coffee, cocoa, sugar and cotton on the Intercontinental Exchange. Futures contracts are a way for commodity traders to sell a certain amount of a commodity at a fixed-price.
It will be interesting to see whether that might harm already struggling coffee shops and brick-and-mortar clothing retailers. Another development this week was the U.S. Environmental Protection Agency’s plans to end requirements for oil-and-gas companies to have systems in place to detect methane leaks, which were put in place under the Obama administration. The rules, which are expected to be signed this week, would apply to wells drilled since 2016, the largest pipelines and storage sites, among others. Methane accounts for around 10% of U.S. greenhouse gas emissions, according to the EPA. Investors have been urging oil-and-gas companies to report more data on their emissions and environmental footprint.
Those changes could have a lasting impact if President Trump is reelected. Though, they might be short lived if Joe Biden wins in November. Now let’s open it up to our readers: Why do you think millennials have been hit harder economically by the coronavirus pandemic?
Share your thoughts below, email us or catch us on Twitter. Your words could appear in our next edition! Have a great week and remember to wash your hands. 👋
Meet the team:
Elevate the Conversation is produced by the editorial teams of The Wall Street Journal and Dow Jones Newswires. Here's a little bit more about us, along with our contact information. We'd love to hear from you.
Dieter Holger, Reporter: I have a knack for uncovering values-based investing trends and I’m obsessed with spreadsheets and charts. I really enjoy ‘80s music, skateboarding and yoga (but I’m bad at both). dieter.holger@wsj.com @dieterholger
Maitane Sardon, Reporter: I have a passion for amplifying the voices of those at the center of stories. I love running on Barcelona’s beaches and binging on chocolate ice-cream to compensate (it’s all about balance). maitane.sardon@wsj.com @sardomaitane
Catherine Lindsay, Editor: I like breaking down complex ideas and explaining them. On the weekend, you’ll find me wandering the city with my film camera at the ready. catherine.lindsay@wsj.com @CathsLindsay
Tammy Lian, Designer: As a visual producer, I'm always excited by the challenge of creative problem solving. In my spare time, you can usually find me taking care of my ever-growing collection of plants and drinking tea. tammy.lian@wsj.com @violian.tammy