The State of Millennials' Finances Says a Lot about Our Economic Recovery

December 23rd 2014

Traditionally, the months and weeks leading up to the new year are a popular time for reflection. Between frantically searching for gifts and trying to stay afloat in a sea of holiday debt, now is a good time to consider all that's happened over the previous 12 months and take stock of what we're grateful for. So now that we have blown past the ball drop and into 2015, the time for reflection is over, and the time for action is now. But for some this year–a certain 80 million-plus Millennials–taking action will involve finding ways past a few financial hurdles. 

Bleak job markets, stagnant or declining incomes, improbably high student debt rates, and greater likelihood of living at home are just a few of the unfortunate realities a large swath of Americans are currently facing as they move forward into 2015. We've outlined some of the most egregious facts of life for a good quarter of the U.S. population below. With any luck, higher gym attendance won't be the only thing we're spurred to change in the coming year.  

1. Low trust, lower savings.

Buying gifts for the holiday season might be getting harder and harder this year. That's because Millennials' coffers are low. As we reported, thanks to relative financial illiteracy, among a number of intersecting issues, Millennials aren't saving money like other generations did at the same age. Reports indicate that a deep mistrust of the corporate finance world (we're looking at you, 2008-9 recession), has made Millennials twice as likely to seek financial advice from their parents. While parents probably have sound advice, they apparently have yet to sit down with their kids and talk about why adults under 35 are saving at a clip of minus 2%, as the Wall Street Journal reported last month. If cues from a growing sector of baby boomers delaying retirement due to financial shortcomings point to anything, it's that this trend could prove dangerous down the road. 

2. Higher education means higher costs

It should be obvious that trusts are hardly the only operative in the down-and-out financial equation of Millennials this year. Perhaps more obviously, though, are the blinding numbers attached to 2014's college graduates and the debt with which they are saddled. As the Journal reported back in May: as happy graduates transferred their tassels, grins were tinged with the sobering knowledge that the average loan-taking student is in the hole $33,000. Around 70% of students currently use loans to finance their education. Moreover, according to Federal Reserve numbers, average student loan debt has jumped more than 35% since 2005, currently exceeding $1 trillion. For many Millennials, the question has become how will I pay off my debt, rather than how will I prepare for my future?

Unfortunately, though, the problem seems more and more inescapable. In an uncomfortable cyclical pattern, with more good jobs requiring higher education, more students are being forced into debt attempting to build a resume sufficient enough to get the very job that will enable them to pay off that debt. But as the costs of college are steadily rising, traditional crutches that sometimes mean the difference between going and not going to college for some students are disappearing. As attn: reported earlier this month, Congress took steps to cut $303 million from the Pell grant program, which provides assistance to students from low-income families. Although rising college costs have slowly cut into the effectiveness of Pell grants (last year, the grant only covered 31% of the average cost of a four-year school, as opposed to the 77% it covered in 1971) there is still a pressing need to keep the program alive. Ironically, the $303 million will be used to pay the federal government's outstanding bills to the private firms that they pay to collect student loan payments.  

3. More education, fewer jobs...?

Just because more Millennials are college bound doesn't necessarily mean they'll be shoe-ins for the high-paying jobs they seek. According to numerous reports, unemployment and underemployment is still high for young college graduates these days. According to the Department of Labor, almost 27% of graduates under the age of 25 are underemployed, meaning they're working jobs beneath their skill level. Add to that, approximately 40% of unemployed workers are Millennials, according to MarketWatchHigh numbers spotlighting overqualified baristas can partly be traced back to a generation unleashed onto the workforce during the particularly bad economic downturn a few years back, when the job market was more or less sapped. But while some areas of the economy have shown some promising growth since then, full time work for Millennials has shifted downward in the last two years. That likely strikes a chord for the growing number of Millennials working minimum-wage jobs since the recession, too.  

It's no consolation, either, that among those lucky enough to have landed good jobs, wages are, generally, in decline or remaining stagnant outside of a few select fields

4. Underemployed and undereducated? 

An often forgotten sector of Millennials, the majority of the generation we should add, are the ones who do not attend college and are consequently more likely to work low-paying jobs to support themselves and their families. They are indeed underemployed, but by a different definition that hones in on stymied potential. NPR reported on Pew data that highlights the two-thirds of Millennials between 25 and 32 that lack a bachelor's degree. For this large percentage of Millennials, the odds are stacked as both going to college and not going to college is increasingly expensive, according to Pew data.

5. Decreased buying power 

There's a pattern of connectedness that emerges as you tick the boxes of problems currently plaguing Millennials. At a certain point, they all run together like train cars speeding towards a cliff. One of the cumulative effects of the issues we've highlighted so far is a potential gap in economic growth. Millennials, as roughly a quarter of the U.S. population, have huge direct buying power. But with 37 million of them paying back student debt loans, that buying power is constantly being redirected and redefined. As Forbes reports, student loans have generated a significant backlash on traditional markets, with home ownership rates down 36% among those repaying student loans, and $6 million lost annually in car purchases directly tied to student debt.

Blows to the traditional pillars of a successful economy may seem like a natural byproduct of a generation somewhat defined by their innovation. After all, millennial money may be going more towards things like phones and computers as a result of cultural advancements more than a conscious shift away from buying cars and houses. But while shifting values are certainly a factor, so too are the issues outside of the direct control of Millennials' pocketbooks: crippling student debt, fewer jobs for qualified graduates, low-paying jobs for those who can't afford a degree, and less money to put into savings.  

Optimistic outlook?

Despite hardships, Millennials remain uniquely optimistic about the future. But at the same time, data shows they are relatively unattached to political organizations. Last month, almost 80% of young voters sat out on the midterm elections. Given the need for better economic representation, this turnout was especially disheartening. Without Millennials' voices being heard, these problems will only persist in the coming years. But the first step towards telling both local and federal governments to find other ways to pay its bills than sucking money from financial aid programs, for example, is easy. Go to and register to vote.

We can no longer afford not to. 

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