Mil­len­nial traits shape econ­omy

Gen Y has fewer big spenders, risk tak­ers than prior groups

Baltimore Sun - - BUSINESS - By Don Lee

WASH­ING­TON — They’re known for bounc­ing around jobs, de­lay­ing mar­riage and hol­ing up in their par­ents’ base­ments.

Dubbed re­cently as the “chil­dren of the Great Re­ces­sion” by Demo­cratic pres­i­den­tial nom­i­nee Hil­lary Clinton, millennials are the best ed­u­cated and most di­verse pop­u­la­tion of young peo­ple in U.S. his­tory. They are also per­haps the most cod­dled, some would say spoiled.

As they emerge this year as the United States’ largest de­mo­graphic group — some 75 mil­lion strong — millennials are tak­ing up the man­tle as the most im­pact­ful gen­er­a­tion since the baby boomers.

Their in­flu­ence has started slowly, due largely to the eco­nomic in­sta­bil­ity that has left many strug­gling to find good-pay­ing jobs and sad­dled with stag­ger­ing stu­dent loan debt.

But millennials — adults un­der 35 — are cer­tain to shape the econ­omy for decades to come. And their com­ing of age in the midst of the worst fi­nan­cial cri­sis since the Great De­pres­sion has bred dis­tinct traits that could pose spe­cial chal­lenges for the na­tion’s fu­ture growth and pros­per­ity.

For starters, millennials are not big spenders, at least not in the tra­di­tional sense.

Gen­er­a­tion Y tends to pre­fer ex­pe­ri­ences over buy­ing things and ac­cu­mu­lat­ing stuff.

Neil Howe, an econ­o­mist and de­mog­ra­pher who coined the term “millennials” with co-au­thor Wil­liam Strauss, sees it as part of a redefining of Amer­i­can con­spic­u­ous con­sump­tion. Those who came of age dur­ing the Great Re­ces­sion are said to pre­fer ex­pe­ri­ences in an econ­omy fu­eled by pur­chases.

In­stead of ma­te­rial wealth, millennials show off through their trav­els, hob­bies and even meals, which get pho­tographed and posted on so­cial me­dia.

“If you’re a foodie, you can go out and have some in­cred­i­ble din­ing ex­pe­ri­ence, and then you can cu­rate it al­most as if it were a thing,” Howe said. Millennials are one rea­son restau­rants have been do­ing well — and hir­ing so many work­ers.

Do­minick Ardis, 29, typ­i­fies his gen­er­a­tion. In be­tween jobs this year, the Tal­la­has­see, Fla., res­i­dent scrounged money from fam­ily and friends so he could im­merse him­self in He­brew stud­ies this sum­mer at Mid­dle­bury Col­lege in Vermont. Last year it was the art of glass-blow­ing. And be­fore that he was get­ting voice lessons.

“Mu­sic is such an emo­tional and ex­pe­ri­en­tial event,” he said. Ardis is in­ter­ested in his ca­reer and mak­ing money too. It’s just that he’s got other things on his mind, like tak­ing a trip to Cuba next year.

Such pri­or­i­ties may well give Ardis and his fel­low millennials a more ful­fill­ing, well-bal­anced life than, say, workaholic boomers. But that may not be great for a U.S. econ­omy driven by con­sumer spend­ing, which ac­counts for two-thirds of the na­tion’s gross do­mes­tic product.

Like other millennials, Sum­mer Lol­lie is keenly in­ter­ested in hav­ing her own place. But with more than $35,000 in stu­dent debt and a car loan to boot, she has strug­gled to make ends meet since she grad­u­ated from Wash­ing­ton and Lee Univer­sity in Lex­ing­ton, Va. She moved back with Mom and Dad in April 2015, pay­ing a lit­tle rent to them.

Another key dif­fer­ence with their pre­de­ces­sors, par­tic­u­larly Gen­er­a­tion X, is that millennials are not big risk tak­ers. That seems es­pe­cially true when it comes to start­ing busi­nesses.

The rate of new star­tups is higher today than 10 or 20 years ago for ev­ery ma­jor age group — ex­cept those be­tween 20 and 34 years old, ac­cord­ing to the Kauff­man Foun­da­tion’s lat­est an­nual study of en­trepreneur­ship.

Two decades ago, a lit­tle more than 34 per­cent of all new en­trepreneurs in the U.S. were younger than 34 years old. Today it’s just 25 per­cent.

“This could be re­ally trou­bling,” said Arnobio More­lix, a se­nior re­search an­a­lyst at Kauff­man.

Star­tups rep­re­sent dy­namism in the econ­omy. New and young busi­nesses have long cre­ated the bulk of new jobs in Amer­ica and are crit­i­cal for pro­duc­tiv­ity growth too.

More­lix be­lieves some would-be en­trepreneurs are be­ing held back by their heavy stu­dent debt load.

Their rel­a­tive risk-aver­sion may also have some­thing to do with the pro­tec­tive en­vi­ron­ment that par­ents and schools cre­ated for millennials, em­pha­siz­ing par­tic­i­pa­tion over win­ning. Said Jean Twenge, a San Diego State Univer­sity psy­chol­o­gist: “Ev­ery­body got a tro­phy.”

Partly be­cause of such pam­per­ing, Twenge ar­gues, millennials are more self­ab­sorbed than prior gen­er­a­tions. But at the same time, re­search sug­gests that young adults today are also very com­mu­nity-minded.

Millennials also came of age in a more racially di­verse and eco­nom­i­cally strat­i­fied Amer­ica, which has made them more sen­si­tive to so­cial is­sues and things like gen­der and in­come in­equal­ity. Gay rights are a given.

Back in 1990, whites made up 73 per­cent of young adults age 18 to 34. That share dropped to 63 per­cent in 2000, when millennials were just en­ter­ing adult­hood, and it’s now down to 55.8 per­cent, ac­cord­ing to Wil­liam Frey, a Brook­ings In­sti­tu­tion de­mog­ra­pher.

Their em­pha­sis on com­mu­nity and so­cial causes is start­ing to be felt on Wall Street too. Beyond their out­sized par­tic­i­pa­tion in the Oc­cupy Wall Street move­ment a cou­ple of years ago, millennials al­ready are over­rep­re­sented in in­vest­ments fo­cus­ing on en­vi­ron­men­tal, so­cial and gov­er­nance is­sues, said Amy O’Brien, man­ag­ing di­rec­tor at TIAA Global As­set Man­age­ment.

She notes that many millennials were in high school and col­lege when the fi­nan­cial cri­sis struck, and that’s had a last­ing in­flu­ence. “They put a large value on busi­ness ethics,” O’Brien said.

Their sense of com­mu­nity has also made millennials more pro­gres­sive when it comes to pub­lic as­sis­tance pro­grams, from Oba­macare to stu­dent debt re­lief. And far from the anti-gov­ern­ment spend­ing mantra es­poused by many of their par­ents, millennials largely em­brace lib­eral ideals about gov­ern­ment, ex­plain­ing why Clinton and her for­mer election ri­val Vermont Sen. Bernie San­ders have put for­ward pro­grams to sub­si­dize col­lege tu­ition and raise the fed­eral min­i­mum wage.

“They ac­tu­ally trust big in­sti­tu­tions like gov­ern­ment more than older peo­ple (do),” said Howe, the gen­er­a­tional trends ex­pert.

WALLY SKALIJ/LOS AN­GE­LES TIMES

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