Millennial traits shape economy
Gen Y has fewer big spenders, risk takers than prior groups
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.