How the last 20 years of economic turmoil broke millennials

The financial crisis of 2008 left no generation untouched: Silent, boomer, and Gen X households all experienced wealth loss. But "older millennials were squarely hammered," Mark Muro, a senior fellow and policy director at the Brookings Institution, previously told Insider.

"Millennials have lifelong damage, given the severity of the Great Recession," he added.

The Great Recession split the generation down the middle, between the older millennials who walked into a dismal job market and younger millennials who experienced the recovery period and became risk-averse by watching the recession unfold.

Coming of age in an era of slower economic growth has made it less possible for millennials to establish a solid career foundation and build wealth, Ernie Tedeschi, a managing director and policy economist for Evercore ISI, told Insider. "This has consequences for individual career prospects and affects their sense of dynamism," he said.

It was a rocky start to adulthood. Research shows that those who graduate during a recession could see stagnation in financial growth for up to 15 years. A St. Louis Fed report found that nearly a decade later in 2016, people born in the '80s had 34% less wealth than they likely would have if the financial crisis hadn't occurred.

But the recession also exacerbated a number of other problems millennials would soon have to deal with.

The financial crisis intensified America's rising student-loan debt burden: graduates had less money to pay off their loans; more millennials enrolled in graduate school during a slow economic recovery, adding to their debt totals; and colleges hiked tuition prices due to lack of state funding. In the 2010s, college tuition more than doubled since the 1980s.

"Prior generations started building wealth right as they hit the labor market," Fikri told Insider. "By contrast, college-bound millennials spent the first decade of their careers digging out of debt."

In a 2019 Business Insider Intelligence survey of more than 2,000 millennials, 60% of respondents said they took out a student loan for undergraduate or graduate education — and 43% owed between $10,000 and $49,999 at graduation.

"My student loans have been the center of my financial world," Daniela Capparelli, who graduated in 2007 with a degree in economics and finance and $150,000 in debt, told Insider two years ago. "I have always felt a huge weight on my shoulders because of this astronomical financial burden."

Fikri described college as a "millennial Catch-22": Many feel that the ticket to a decent standard of living is a college degree, but going into debt makes it a rather expensive ticket and undermines the value of the degree itself.

"The burden of student debt relative to income and available opportunities keeps them trapped in a sort of limbo that's financially, emotionally, socially, and economically damaging," he said.

By 2019, the oldest millennials had finally narrowed their 34% wealth deficit. A follow-up St. Louis Fed report found that those born in the 1980s have median wealth levels 11% below older generations at similar ages.

"It turns out that millennials may not be as 'lost' as we once thought," read the report.

But the following year, the pandemic hit. While there isn't enough data yet to determine the exact impact it had on millennials, it was another curveball for the generation. It widened the millennial inequality that dated back to the Great Recession, with wealthier millennials faring well while their low-earning peers are struggling.

Millennials who already had lower earnings prepandemic and millennials with children were among those who suffered the most, Christine Percheski, demographer and associate professor of sociology at Northwestern University, previously told Insider. About 40% of millennial parents saw huge increases in hardships, she added, due to increases in food and housing insecurity and mothers cutting back employment hours or quitting work altogether to meet caregiving needs during the pandemic's school closures.

When unemployment peaked in April 2020, 14.5% of Americans ages 25 to 34 were unemployed, according to the Bureau of Labor Statistics. That's higher than the 10% unemployment peak of the Great Recession in 2009. And while some millennials may have escaped job loss, not all skirted past pandemic pay cuts.

"I would imagine a lot of people are burning through whatever savings they had as they experienced unemployment," Percheski said.

Come 2021, millennials had finally reached the peak age for first-time homeownership. After spending years saving for a down payment, historically low mortgage rates and the flexibility of remote work enabled them to finally achieve their homebuying dreams.

But the demand exacerbated an already shrinking housing inventory that was first fueled by contractors underbuilding homes since the Great Recession, and a housing boom soon became a housing crisis. Starter homes were the biggest victims of the dwindling inventory, as the national median home sale continuously climbed upward before reaching a record high of $386,888 in June 2021. Just as homeownership fell within millennials' grasp, it began to slip out of their fingers again.

"Now that they have economically recovered and are looking to buy a home for the first time, we're faced with this housing shortage," Daryl Fairweather, the chief economist at Redfin, told Insider last year. "They're already boxed out of the housing market."

There have been 20 times fewer homes built in the past decade than in any decade as far back as the 1960s, according to Fairweather.She added that was not enough homes for millennials, who are the biggest generation, to buy.

Gay Cororaton, the director of housing and commercial research for the National Association of Realtors (NAR), told Insider homeownership was "going to be more difficult for millennials."

It was yet another wealth avenue lost for millennials.