Black millennials are struggling with Negative Net Worth. The Pandemic didn't make it Better

While the average American millennial is financially behind, the Black Millennial is in a financial storm in the middle of the Atlantic. Thanks to decades of student debt and cost of living increases, the net worth of Black millennials registers in the negative. The pandemic split millennials sharply into two groups, the educated have and the have-not.

Although, the Black community has long be familiar with systemic oppression and financial struggle, Black wealth is certainly headed to Zero as Black spending draws closer to $2 Trillion.

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The Average Millennial and the Racial Wealth Crisis

Meet the average American millennial, who delays life milestones, has a net worth of $8,000, and is actually financially savvy.

There’s no way around it: The average American millennial is financially behind.

Faced with a high cost of living, staggering student-loan debt, and the fallout of the Great Recession, American millennials are trying to make ends meet in the midst of The Great American Affordability Crisis.

Rich Black Millennial, Poor Black Millennial

The financial crisis split the generation into two distinct groups. Older millennials, who bore the brunt of the financial crisis dealt with a tough job market and wage stagnation, making it more difficult for them to save. Younger millennials, who experienced the recovery period, entered a better job market and became risk-averse by watching the recession unfold.

The generation overall, however, is plagued by financial problems that baby boomers didn’t have to face at their age. From saving to spending and financial behaviors in between, here’s what life is like as the average American millennial.

The average American millennial makes $35,592 a year, but it’s less if you are Black

Adjusted for inflation, the annual salary of a millennial today is an estimated 20% lower than the average salary for a baby boomer at the same age, according to a SmartAsset study that analyzed data from the Bureau of Labor Statistics for millennials who were ages 16 to 34 in 2015.

But in today’s high cost of living, salaries are no longer what they once were. While millennials have benefited from a 67% rise in wages since 1970, according to research by Student Loan Hero, this increase hasn’t kept up with inflating living costs: Rent, home prices, and college tuition have all increased faster than incomes in the US.

American millennials have an average net worth of less than $8,000, meaning they’re financially worse off than any other generation before them.

The net worth of Americans ages 18 to 35 has decreased by 34% since 1996, according to a Deloitte study reported by Abha Bhattarai of The Washington Post. This makes them “dramatically financially worse off” than older generations, Business Insider’s Kate Taylor reported.

More Bad News for Black Wealth

These findings underscore previous research indicating that millennials are financially behind.

And millennials are less wealthy than previous generations were at their age at any point between 1989 and 2007, according to The Economist, which cited a recent paper by The Brookings Institution. Median household wealth was roughly 25% lower for those ages 20 to 35 in 2016 than it was for the same age group in 2007.

And the typical millennial has less than $5,000 in their savings account.

A survey by Insider and Morning Consult found that while 70% of millennials have a savings account, 58% have a balance under $5,000.

Despite millennials’ best financial efforts, a large debt load on average is preventing them from saving as much as they’d like. While many don’t carry credit-card debt or owe less than $5,000, nearly 45% of millennials have student-loan debt, Business Insider’s Tanza Loudenback reported.

When asked what they would do with an extra $1,000 cash, millennials were more likely to prioritize paying off debt over saving (a difference of 5 percentage points), the survey found.

Despite being financially behind, the typical millennial has a practical approach to money, saving for emergencies, and contributing to a retirement account.

Playing Catch Up and Adulting while Black

While economic conditions have left millennials financially behind, they’re working hard to catch up.

Millennials are more aware of the risk of a bad economy and are being more practical when it comes to money, from saving for emergencies to contributing to a retirement account, Jason Dorsey, a consultant, researcher of millennials, and president of the Center for Generational Kinetics, previously told Business Insider.

And nearly 75% of millennials stick to their budget, Business Insider’s Hayley Peterson previously reported, citing Bank of America’s Better Money Habits Millennial report.

Millennials even report being more dedicated to saving than older generations. Northwestern Mutual’s Planning & Progress Study 2018 found that they were more likely than other generations to say they’re “highly disciplined” or “disciplined” financial planners.

But the typical American millennial is also carrying a crippling amount of student-loan debt.

The Financial Weight of Crippling Debt and the Financial Failure to Launch

Student-loan debt has reached record levels because of the cost of college, which has more than doubled since the 1980s. As of 2019, student-loan debt reached a national total of $1.5 trillion, according to Student Loan Hero. Millennials in the graduating class of 2018 have an average student-loan debt of $29,800.

The weight of this debt is hindering millennials’ ability to save. More than half of indebted millennial respondents in a survey by Insider and Morning Consult said attending college wasn’t worth the student loans.

The survey polled 4,400 Americans, 1,207 of whom identified as millennials, defined in the survey as those ages 22 to 37.