Generation left behind? Millennials work to shed that financial label.

Ross Wakeman-Hines, a millennial electrical engineer from Viera, Florida, bought a house last year right before the onset of the pandemic.

The trouble was, he hadn’t sold his present home. And when the lockdowns hit, the old house sat on the market – and sat and sat for a full year before he finally unloaded it.

That meant double mortgage payments and double the expenses of home maintenance, which forced him to suspend his 401(k) contributions to conserve cash.

His wife, Honghong, had it worse. The pandemic, along with rising political tensions with China, killed her business of helping students from China apply and get accepted to U.S. colleges. She’s now selling life insurance.

If ever there was a generation that could complain about lousy timing, it’s millennials. Through no fault of their own, they started their careers in and around the Great Recession, then in midcareer got hit with a pandemic that locked down businesses and threw millions of workers out of jobs. 

Their story is one of perseverance and – for many – of progress against these head winds. But the setbacks exaggerated trends already underway in the rest of the American workforce: A widening of the already-yawning gap between the haves and have-nots played out along gender, educational, and racial and ethnic lines. 

The hardship – and the pluck and creativity with which they are meeting it – goes beyond the Great Recession and the pandemic.

“What this generation uniquely has going against them is just the high cost of so many essential things in life,” says Lowell Ricketts, a data scientist at the Federal Reserve Bank of St. Louis. The rising cost of homes, higher education, and child care makes it more difficult for millennials to get ahead. “On so many fronts, this generation is pinching its budget,” he says.

While income certainly plays a role, big disparities are showing up in wealth. Typically, a generation’s wealth accumulation takes off very slowly. How slowly depends on the state of the economy when entering the workforce: Start during boom times, and advances and pay increases come quickly; start during a recession, and you’re playing catch-up.

The latter is what happened to millennials who, although the best-educated generation in history, couldn’t find jobs during the Great Recession.

Mr. Wakeman-Hines, although a well-educated engineer who survived all the layoffs at his avionics equipment company in 2008, nevertheless had to take a pay cut and was stuck with that new-hire pay for two years until he went to his boss and got a raise. By 2010, the first full year out of the recession, millennials like him had accumulated 48% less wealth than previous generations had at that point in their careers, according to a study by the St. Louis Federal Reserve Bank.

Significant recovery for many

They spent the rest of the decade catching up at an amazing pace, according to the study. By 2019, the wealth of these older millennials (born in the 1980s) was only 11% behind what previous generations had accumulated. Then the pandemic hit. 

Millions of Americans lost income and jobs, an employment deficit the United States is still climbing out of. The hardest hit financially: millennials and the younger generation known as Gen Z, according to a June survey by financial services company Edward Jones.

More than a third of millennials said the pandemic had a negative impact on their financial security. That impact has proved uneven, hurting women more than men.

Less than a month after the pandemic hit, Andrea L’Heureux lost her job as assistant manager of Andy’s Candy Apothecary in downtown Sacramento, California. “I was locked down by myself,” she recalls. “It was very hard to manage that.”

Ms. L’Heureux moved back in with her family in the Bay Area and started working part time in the family business. That and a few freelance gigs have kept her head above water while she contemplates her next step.

“It’s the tale of two different millennial tracks,” she says. “I have friends who are selling their houses because the market’s so great. But then you have people in my shoes. I call it untethered. You can do anything. That’s cool. But there’s less structure.”

The pandemic has made her more pessimistic about the future, she says. “This whole year has been risk assessment day to day.”

Both Mr. Wakeman-Hines and Ms. L’Heureux are college-educated and white. For those with no more than a high school education and for people of color, the future looks dimmer.

For example, while college- and non-college-educated older millennials were fairly close in terms of wealth expectations in 2013, only the college-educated group had made substantial progress by 2019, according to the St. Louis Federal Reserve Bank study. They went from being 21% behind previous generations of college graduates in 2013 to only 2% behind in 2019.

But for non-college-educated millennials, things barely improved during the same period: 23% behind the wealth of previous generations without a college degree to 19% behind.

Older Hispanic millennials made substantial progress during that period: from 37% to only 10% behind. Black millennials, however, went backward: from 28% to 52% less wealthy than previous Black generations. How could the best-educated generation of African Americans be so far behind? 

Part of it, ironically, is because of those college degrees.

The tough road for Black millennials

“We are starting off behind,” says Anna N’Jie Konte, who is herself a Black millennial and a financial adviser in Silver Spring, Maryland, serving other millennials of color. “You don’t have an inheritance. You don’t have financial support from your family. ... Oftentimes, you’re the only one in your nuclear family that’s doing well.”

Without family help, Black students often have to take on more college debt than white students – an average of $25,000 more, according to the latest report by EducationData.org. Nearly half say they owe more in student loans four years after graduation than at graduation.

There’s another challenge: As first-generation wealth-builders, Black millennials are often called upon to help out parents, grandparents, or siblings who are less well off.

“You are really sandwiched between your kids and your grandparents,” Ms. Konte says. “It’s a lot of tension.” Part of her work involves getting her clients to set boundaries on family support, as difficult as that might be. “They have to be financially strong before they can help other people,” she says.

Even Black millennials with a good income describe their financial position as precarious. If there’s no inheritance, no cushion of wealth from family members, problems can quickly add up if something goes wrong.

”Being Black and middle class is a false sense of security,” says Kristen L. Pope, a social media manager from Natick, Massachusetts. 

In 2018, with a new baby and a new mortgage, she and her husband, Richard, found themselves both unemployed. After three months, Mr. Pope got a new position in the notoriously up-and-down hedge fund industry. It took her eight months to find a new job. By then, the debts had begun to mount, eventually reaching $70,000 in personal loans and another $50,000 in credit card debt. “No one was coming to save us but God himself,” she says.

The couple cut out discretionary spending, devoted all of Mr. Pope’s bonuses to debt repayment, sold a home in Pennsylvania that he had been renting out, and refinanced their own home mortgage – twice.

While the pandemic was throwing millions of Americans out of work, Ms. Pope landed a new job creating social media and digital content for a university that paid her $60,000 more a year. Her company, Pope Productions Inc., which coaches, trains, and places aspiring journalists into jobs, was able to keep a contract with an after-school program in Harlem because she could continue the work remotely.

By the end of 2020, the couple had wiped out that $120,000 debt and reduced monthly expenses by a whopping $5,000.

“Our faith in God has really carried us over this ditch,” she says. “It’s a true, true testimony. ... We are very fortunate, but we have come against the same barriers to entry” that previous generations of African Americans have faced. 

For example, the first time the Popes refinanced their home last year, the appraiser came, “he saw me, and made the decision to appraise below average and below comps,” the comparable neighborhood properties against which a property is judged. The couple went to another appraiser – an online one – to complete the refinancing.

“I have to be optimistic”

Those racial barriers, sometimes overt, sometimes subtle, make her pause for a long time when asked if she’s hopeful about Black millennials’ financial future. “I have to be optimistic because I have a child,” she says.

Ms. L’Heureux, the former candy store manager, is pretty sure she won’t out-earn her dad, a successful entrepreneur. And even Mr. Wakeman-Hines, the engineer, is skeptical that the dream of American parents – that their children will be better off than they were – will be realized by his generation.

“Things are getting tougher for the younger generation, and inflation has happened and wages haven’t really been keeping up with inflation,” he says. “So it’s kind of hard to get the same kind of lifestyle that my parents had, you know, without working really hard at it.”

Ms. Konte, the financial adviser, is more optimistic about millennials, especially the Black millennials she advises.

“My clients, they are earning more money than they ever had, and they’re investing more money than they ever had,” she says. “And ... once that genie is out of the bottle, you can’t put it back in. ... I wouldn’t be surprised if 30 years down the road, we look at this as a sea change.”

One thing seems clear. The generation hit by two once-in-a-lifetime financial disasters before their 40s is taking nothing for granted. For some, that means securing their financial life with more focus and seriousness that their boomer parents did.

“They’re going to be more serious,” says Michael Solari, a financial adviser with millennial clients with offices in Boston; and Bedford, New Hampshire. “It’s because they have to be that they are going to take it more seriously.”