DALLAS – Megan Lyons gave up a corporate job to follow her passion. The 30-year-old, who launched her fitness and nutrition coaching business 16 months ago, now has a waiting list of clients and is on track to earn six figures this year.
Jane LeBlanc has two degrees but has not been able to find a permanent job in the last seven years. The 33-year-old works as a temporary proofreader and freelancer.
The two women stand at opposite ends of the employment spectrum, but they have one trait in common: They’re millennials – 18- to 34-year-olds who make up the largest, most diverse generation in America.
The roughly 74 million millennials will have a profound economic effect as more baby boomers retire. They’ll spend more money on new technology, they’ll start the next Google and they’ll become the main breadwinners for their families.
But some of their distinct characteristics may delay their full impact. Millennials – also called Generation Y – tend to be highly educated but burdened by student loans. Many are unemployed or underemployed. They also are waiting longer to marry, have kids and buy a home or a car. Many still live with their parents.
“You have this big generation – bigger than the baby boomers now – and they have the potential to buy cars, buy houses, and the numbers do matter,” said Sarah Watt House, an economist for Wells Fargo who studies millennials. “Look around the world: One of the reasons Japan is really struggling is that their population is not only aging, but declining.”
Unlike previous generations, millennials face a tough climb up the economic ladder. Younger millennials (ages 18 to 25) entered the workforce during the recession, complicating their efforts to find a job and postponing their peak buying power for years.
Estimates of millennials’ purchasing power vary widely, but a U.S. Chamber of Commerce report put their annual spending at $200 billion – a fraction the size of the $1.2 trillion U.S. Hispanic consumer market.
So far, millennials have been more of an economic drag than a driver, but that could change as the economy and employment opportunities continue to improve.
Last year, nearly 5 million millennials were out of work across the U.S. They made up half of the unemployed people in the nation, the most of any age group. The unemployment rate for millennials is much higher than for other age groups, and it ticked up in March. More than 10 percent of people ages 20 to 24 were out of work vs. 5.6 percent for those 25 to 34 and 5.5 percent for all workers.
The reality may be worse because statistics often don’t reflect people “with a degree who are working full time at Starbucks,” House said.
Take LeBlanc. Though armed with a bachelor’s degree in technical writing and a master’s in journalism, she can’t find a permanent job. She works at least 40 hours a week as a temporary proofreader for a Big Four accounting firm in Dallas and writes for the Dallas Observer on the side.
“I make enough as a temp to live on, but I would like to be a permanent employee somewhere,” said LeBlanc, who owes about $47,000 on student loans. “It’s been a very long time since I was permanent.”
Since the recession began in 2007, more millennials have moved into lower-paying jobs, such as at hotels and restaurants, and fewer work in higher-paying jobs in financial services and manufacturing.
Such shifts mean that household incomes for people under 35 are lower than before the recession. The average millennial earned $33,883 in 2013, compared with $40,352 for workers of all ages, according to the U.S. Census Bureau.
Roughly a quarter of millennials earned less than $25,000 a year, and only 7 percent made over $70,000, according to a recent Federal Reserve survey.
The average young family’s wealth is $108,000, about a third below 2007 levels, according to a report from the Federal Reserve Bank of St. Louis.
Most millennials also aren’t saving enough for an emergency or retirement, partly because of their student debt burdens. A recent survey by Principal Financial Group found that nearly two-thirds of workers who are 23 to 35 started saving for retirement before they were 25, but less than one-third save 10 percent of their salary through an employer-sponsored plan.
Despite some struggles, many millennials are optimistic. Nielsen found that 69 percent don’t think they earn enough to lead the lifestyle they want now, but 88 percent think they will in the future.
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