The “Millenials” sounds like a title for the latest summer Blockbuster. In reality, this 18-29 year old generational group is not made up of super-heroes, but includes our youngest voters and economic contributors with some very real and human characteristics. This Generation Y, as they are also called, has some unique perspectives, shaped by some of the most significant political, environmental and economic events in recent history. These young adults are survivors of a post 9/11, Katrina and Sandy-ravaged, 2008 financial-crashed economic and political landscape that has left them with, at best, a “Depression-era mindset”. In the aftermath of these events, and savvy to the explosion of technological advances, the Millenials are already influencing the world around them.
According to a Census Bureau survey, Millenials have higher rates of unemployment and less earning power than their-age peers of previous generations. They are also less likely to be married, have children or own a home. The Generation Y’ers document every move they make with social media, YouTube, and reality TV, and their handheld electronics are never out of reach, even while they sleep. They are serial multi-taskers, looking for instant gratification and possessing a short attention span. According to the Pew Research Center, they also rank “helping others in need” as a personal priority right behind having a good marriage and being a good parent. Reportedly, Millenials are thought to be civic-minded and have a strong sense of community. They are also described as passionate, creative and entrepreneurial. Millenials want to live a fuller life.
On the job front, by 2025, Millenials are expected to make up as much as 75% of the American workforce. Some employers worry that these younger employees are impatient in their first jobs and the sometimes inefficient environment that contrasts with the world they knew in college, where everything was at their fingertips. They can send 4 texts, Google map the nearest Starbucks, order from their Amazon app and pay their student loan bill in 10 seconds with one hand. On the other hand, their altruistic views will demand more of their employers and they are concerned that what they do and where they work will have a positive impact on the world around them. These expectations will all impact how employers do business.
With unemployment for their age group around 15% and earning lower wages than their predecessors, these Millenials also face large burdens of student loan debt and strict credit that make it difficult for them to purchase their first homes. The rates of home ownership for those younger than 35 have fallen considerably and have kept the first-time home buyers from helping in any housing recovery, according to U.S. Census statistics. The obstacles of not having a job or starting one late and having a lot of debt prevents sufficient accumulation of savings for down payments on a home. Many are delaying marriage and home ownership as they focus on their careers and paying off student loans and other debts. This may mean longer periods of renting before marrying, purchasing a first home and starting a family.
How else will the Millenials shape the economy? In a statement that accompanied a Market Strategies International report, “Millenials seem to be permanently scarred by the 2008 financial crisis.” Think of the Occupy Wall Street movement of 2011. They seem to have very conservative investment risk tolerance and do not think long-term investing is important compared to other categories of investors. In an interview with Think Advisor.com, Meredith Rice, a Senior Director at Market Strategies International, thinks that as a result this generation is “very cognizant that they have more personal responsibility for their saving”, even as burdened by debt as they are. The Millenials are skeptical of depending on Social Security benefits or pensions for their future and believe saving is crucial. On average, this generation is keen on keeping larger percentages of cash in their portfolios. They also believe in higher standards of success and report that $220,000 a year for household income is necessary to achieve that success. Many believe the Millenials will be attracted back to the stock market, but that it will take time and consistent stability.
It is hard to know exactly how these conservative, community-minded and tech-driven Millenials will impact the world around them. Certainly, defining success as hard work, saving more and having meaningful relationships suggests that perhaps this younger generation has as much to teach as they have to learn!