Millennials, people of color hit hardest by the coronavirus recession

People pick up food at the Food Bank For New York City mobile food pantry in Brooklyn on April 24.
Angela Weiss | AFP | Getty Images

The coronavirus pandemic plunged the economy into a recession, according to most experts. While there's some hope that the recovery could be quick, it remains to be seen which sectors, and which workers, will have the easiest time rebounding.

The outlook for millennials and people of color in particular seems worrisome, based on much of the data already available.

A Pew survey from May found that 3 out of every 10 Americans either lost their job or had to take a pay cut because of the pandemic. Those numbers are higher for Hispanic (43%) and black (29%) Americans than they are for white Americans (25%). Every age group has also been hit harder than the one older than it: 40% of 18-29 year olds experienced layoffs and cuts, for example, compared to 28% of people between ages 50 and 64.

Millions of Americans may feel the effects on their financial well-being for years to come, and many of them were already vulnerable.

Millennials and people of color were already at a financial disadvantage

Since the baby boom, every generation has held a less wealth than the one preceding it, according to numbers from the Federal Reserve. A recent Washington Post analysis found that millennials have lived through the slowest economic growth of any generation in the last 200 years. In response to its findings, the Post called millennials "the unluckiest generation in U.S. history."

Part of the problem is that if you can't build that wealth when you're younger, you're more likely to struggle to do so later in life, experts say. And millennials have now been set back twice in their attempt to establish their careers and accumulate wealth.

For people of color in America, a similar dynamic has played out over centuries, according to a recent Brookings report, which delves into the historical roots of that disparity dating back to slavery. The typical white family had 10 times as much money as a typical black family did in 2016, per the most recent Federal Reserve Survey of Consumer Finances. That's money that can't be invested in a home, a retirement fund, or their children's future.

"If you look at African American communities and the wealth gap, that wealth gap — while it has narrowed over in some years, it has still remained pretty wide," says Frank Paré, a certified financial planner and founder of PF Wealth Management Group in Oakland, California.

The Pew survey also found that the pandemic was disproportionately affecting the jobs and incomes of people with less wealth and lower education levels. Paré expects that along the same lines, the recovery could be clearer and easier for people with college degrees. 

The pandemic "is not going to narrow the wealth gap," he says. "If anything, it's going to probably expand it, and it's going to be prolonged, as it has been historically."

'Wealth was wiped out' in the Great Recession, too

Millennials have generally had a harder time saving enough money to buy a home than their parents. For communities of color, the foreclosures that came with the subprime mortgage crisis had a catastrophic impact on their ability to build wealth.

"If you look at the Great Recession, a good portion of wealth was wiped out in terms of homeownership for African-Americans, and part of that was due to predatory lending," says Paré. He also cites the exclusion of black communities from many social programs in the last century, including parts of Social Security.

"You look at all of these things throughout history that might have short circuited that ability to start building wealth, and now here we are in 2020, and we have this pandemic thing that we're going through, and just the wide swath of people who are just being decimated in terms of not only opportunity, but health," he says. In many cases, they're "dying, literally."

How to spend a stimulus check if you're unemployed

Video by Jason Armesto

In Paré's view, any real, long-term solution here will require not just individual actions but systematic change. 

Several black business and nonprofit executives told CNBC's Sharon Epperson that the recent protests across the country are pointing out the need for that kind of change.

"So much of this unrest, this civil unrest, is tied to economic inequality. That's just a fact. We need to move the needle on this economic inequality," says Mellody Hobson, president and co-CEO of Ariel Investments and a member of the board of directors at Starbucks, JPMorgan Chase, and Quibi.

"It's going to take a serious will in order to affect change, and that's where I think the challenge of implementation will fall," he says.

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