Roughly one-quarter of adults believe they are financially worse off now than at the beginning of the pandemic. However, not all generations have experienced the COVID-19 economic recession equally. In March and April, nearly 60 percent of Gen Z adults reported they or their families experienced job-related losses, and more than a third reported they were worried their families would face difficulties paying rent, mortgages, or utility bills in the coming month.
To explore young adults’ experiences with employment, hardship, and financial distress months into the pandemic, we analyzed new data from the Urban Institute’s September 2020 Coronavirus Tracking Survey. Our findings can inform strategies to support young adults facing employment instability and hardship.
Young adults are most likely to experience pandemic-related employment instability
Nearly one in five young millennials and Gen Z adults (19.5 percent) reported they or their spouse or partner experienced layoffs since the pandemic began. Unsurprisingly, they’re also more worried about being able to work as many hours as they want next month, compared with working-age baby boomers.
Although some working-age baby boomers may not be worried about future work hours because they are retired, younger adults may be more worried because they rely heavily on the gig economy (PDF) and temp jobs, which have less-predictable earnings and are the first to be cut in economic downturns (PDF). This can have permanent effects on young adults’ careers; evidence shows people who experience early career recessions have lower employment and earnings (PDF) than their peers who began their careers in good economic times, even after the recession ends.
Employment instability makes young adults more susceptible to hardship
Young adults are not only experiencing more job losses during the pandemic, but many also don’t qualify for traditional unemployment insurance. This makes them more susceptible to food insecurity. Nearly one in four young millennials and Gen Z adults (24.2 percent) reported experiencing household food insecurity in the previous 30 days. Without access to federal nutrition programs (PDF)—which have barriers to eligibility and limited information for young adults—young adults must make difficult trade-offs between paying for housing, utilities, education costs, and food (PDF).
Evidence shows young adults may face employment instability and hardship, but some groups of young adults are more vulnerable than others. Young people with low incomes have struggled to make ends meet and to regain employment after losing it, and they were at greater risk of experiencing housing, nutrition, or health-related hardships.
Young people of color also disproportionately suffer from the recession’s negative economic effects and food insecurity. This is largely because a long history of occupational segregation—stemming from educational disparities, segregated job search networks, and hiring discrimination (PDF)—disproportionately pushed Black and Latinx workers into essential industries, where they hold less-stable, lower-paying jobs than their white counterparts.
And women, who already faced occupational segregation and who have disproportionately taken on child care, are experiencing higher unemployment rates or risker work in essential roles during the pandemic. These groups are facing unique and acute hardships and could benefit from targeted interventions.
Young millennial and Gen Z adults lean on savings to weather the pandemic
Savings can help families weather financial shocks (PDF), but one in five young millennial and Gen Z adults reported they or their families used all or most of their savings during the pandemic. Young millennial and Gen Z adults (16.0 percent) were also more likely than working-age baby boomers (11.3 percent) to report they or their family took money out of retirement, college, or other long-term savings during the pandemic.
Though younger adults are less likely to have retirement savings (PDF), more than 60 percent do. For young millennials and Gen Z adults, these long-term savings reflect important investments in their wealth-building potential and future financial resilience, areas where they were already struggling to find financial footing.
Young adults need immediate solutions to build financial resilience
Federal policymakers could consider the following policy adaptations, which would provide a lifeline for struggling young adults.
- Provide direct cash assistance. As young adults draw down their own savings, direct cash assistance, like economic impact payments dispersed by the Coronavirus Aid, Relief, and Economic Security (CARES) Act, could help them meet their needs and keep them out of poverty. They could also be expanded to include dependent young adults, and disbursement mechanisms could be improved to reach those in need faster.
- Expand access to unemployment insurance for more young adults. Though the CARES Act expanded who qualified for unemployment benefits, it can be renewed before its December 26 expiration date to continue providing critical supports to part-time and gig workers. Benefits could also be enhanced to reach young adults who are either entering the workforce or unable to seek work by adding a jobseekers allowance.
- Eliminate asset limits from federal programs. Asset limits create systemic barriers to building emergency savings. Relaxing asset limits in key programs, like the Supplemental Nutrition Assistance Program (SNAP), can increase savings among households with low incomes, which could allow young adults to meet their needs while avoiding short-term hardships at a time when many young adults are leaning on savings.
- Expand SNAP benefits for college students. SNAP can provide a lifeline to young adults experiencing food insecurity during the pandemic. Roughly half of young adults enroll in college, facing barriers at the federal and state level to accessing SNAP benefits when they need them (PDF); only 18 percent of students are eligible. Policymakers could permanently remove the federal work requirement, extend eligibility explicitly to Pell grant–eligible students, and expand the acceptance of SNAP to on-campus meal vendors to better serve young students facing food insecurity.
Young adults are facing high levels of employment insecurity and hardship, and additional federal support could help them develop financial resilience to weather the pandemic. Any policy solutions should target the needs of young people of color, young women, and low-income youth, who are experiencing unique and pervasive challenges to establishing stability.