The coronavirus pandemic has had a devastating impact on the U.S. economy, putting more than 100,000 small businesses out of operation and sending millions of workers to the unemployment line.
As many states have begun to lift their restrictions this summer, the country has seen some economic gains. In June, for instance, American employers added roughly 4.8 million jobs. And last month, they hired back another 1.8 million workers, despite a spike in COVID-19 cases across the country and renewed restrictions in some parts of the U.S. that forced businesses to shut down again.
As of the end of the July, the unemployment rate has dropped to 10.2%, down from its April high of 14.7%. However, many experts worry about the wider impact of this latest recession, particularly in regard to younger generations, who have taken the brunt of the recent layoffs and whose financial well-being is so crucial to the future of the American economy, particularly the retail industry.
According to a report from The Wall Street Journal, the unemployment rate for millennials is 12.5% — higher than the rate for Gen Xers (born between 1965 and 1980) and baby boomers (1946 to 1964).
Part of the reason for the disparity, the report says, is that a higher percentage of young people work in some of the hardest-hit industries, which include professional services, retail, leisure and hospitality. (Similarly, women have had higher job losses than men during the pandemic for that same reason.)
This is a serious blow to the finances for the millennial generation, who were already at a disadvantage. Many of them entered the workforce during the Great Recession of 2008, and as a result have been slow to accrue savings and invest in home buying.
However, despite those challenges, millennials have in recent years wielded incredible power with their wallets.
For instance, a 2018 study found that “bridge millennials” — the group of 30- to 40-year-olds straddling the gap between millennials and Gen Xers — are a significant consumer segment for the fashion industry, making an average of 18.3 purchases annually and spending nearly as much their older, more established peers, at $2,225 per year on average.
And the younger generations have also helped to shape the way that businesses operate, driving them to invest more in e-commerce sales and social media marketing, and to give more attention to issues around diversity and inclusion, gender equity and sustainability.
They’ve also helped to fuel the rise of at least two new retail channels: subscription boxes and the fashion resale market.
Regarding the former, a 2019 survey from First Insight found that 31% of millennials currently subscribe to subscription boxes in the U.S., versus 21% and 8% of Generation X and Baby Boomers, respectively.
And resale company ThredUp estimates that millennials (between the ages of 25 and 37) currently make up the largest group of second-hand shoppers, at 33%, and they have the second-highest level of adoption, behind Gen Z.
Should the U.S. economy continue to stagnate, the retail industry will not only suffer from the loss of millennial spending, but also from the cohort’s ability to drive change. This generation has succeeded at inspiring corporate innovation, and that is a trait that is going to be sorely needed in the months ahead, as the country pulls itself out of this financial crisis.