Why Gen Z will be hit the hardest by the financial fallout from Coronavirus

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  • POSTED ON: May 18, 2020

Pew Research Center defines Generation Z as those individuals who were born after 1997.


So, according to this definition, the eldest member of this group is now graduating and stepping into a labor market that has been destroyed by the global pandemic. Although Coronavirus majorly infects the elderly, it is actually the Generation Z that will come out more damaged and distraught than the rest.


It’s because workers from this cohort are more likely to work in industries that are currently shut down due to the social distancing restrictions. Their future looks grim and the Resolution Foundation indicates that layoffs related to the pandemic are set to affect the young. Their job prospects and salary appraisals will take a setback and experience negative long-term implications.


The world is still in the initial stages of what is doubted to be the most devastating economic crisis since the 1930s. With the lockdown imposed and major production losses observed, a global recession is looming right around the corner. In this case, the actual blow will be faced by recent graduates. Fewer jobs are now available especially in the hospitality, travel, and retail sectors. Keep in mind that these are the same industries that provide a large number of entry-level jobs.


In the UK, the unemployment rate was at 10.9% in 2019. In 2020, the unemployment rate amongst the 18-24-year-olds is gone up to 27% as per the data accumulated by the Resolution Foundation.


This suggests that 640,000 more people are out of work. "The unique nature of the current crisis has damaged the first rung on the employment ladder for a substantial proportion of education leavers - and it is so far unclear when, and to what extent, these sectors will recover." - The report claims.


In the US, the lockdown has given rise to the unemployment rate with now 20.5 million people out of work. This is the largest decline ever since the great depression! According to the Bureau of Labor Statistics, the unemployment rate is the highest amongst teenagers (16-19) as they currently stand at 31.9%.


The unemployment rate for adult men is 13% and 15.5 for adult women. This data was drawn in April 2020.


"Initially, at least, layoffs were concentrated in a certain set of industries, which hit the 16-24 age group hard. That initial unemployment was very much concentrated on ... Gen Z. [They] got hit badly." – said Fry while speaking to CNN.


Although the statistics look grim, Generation Z can still be optimistic as they have a higher chance of recovery from the pandemic when compared to the Millennials.


"When it comes to wealth-building, one is ... able to better deal with a crisis if you ... have more years to adjust." – said Fry. “


During the [2008] recession, Millennials dealt with [the crash] by moving in with Mom and Dad. We may be seeing Gen Z do the same here. And that's not a path that's as open to older Millennials now. They may have families of their own and aren't able to access those resources. But I don't think we know the long-term impact of this yet. We just don't know how long and deep this downturn is going to be." – Fry added.


The pandemic might have directly affected Generation Z’s education and job prospects, however, for millennial, it is yet another blow which needs urgent damage control. This is the same group that was still recovering from the 2008 recession and the global financial crisis. For them, an even slower economic recovery is expected.


“[The Millennial generation] is a particularly aggrieved cohort of young adults. Already their prime work and family forming years were significantly undermined by coming of age in the great recession." – said Reid Cramer, a non-resident fellow at the New America Foundation.


"They have lower savings. They have a lower trajectory for [building] long-term wealth. And many are not living in individual households - instead, they're in communal arrangements or still with their parents." – He added.


Millennials didn’t graduate during the worst global recession since the great depression but they are still on track to becoming the first generation ever that did not earn more wealth than their parents.


Updated May 18, 2020
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