If you’re wondering why so much talk lately has been about Millennials, it may be because they’ve just become the majority of the American workforce. It’s true. The offspring of the “forever young” Boomers are taking over. The torch has been passed. There’s no going back. And over the next 10 years, they’ll completely transform the economy by dent of their purchasing power. The question is: will you and your organization be ready to profit from this tectonic demographic shift? What are you doing now to anticipate their unique wants and needs as both employees and customers?
Readers of this newsletter know that our focus is on tracking the trends. Frankly, they don’t get any bigger than this one. Our goal is to get you “thinking ahead of the curve” so that you are positioned to seize the opportunities in change. What we discovered when turning our sights on this fast-rising age wave (ages 19 to 35) was that our perceptions were riddled with clichés rather than fresh, actionable insights. So we poured over numerous surveys, read a dozen articles, and soon became … overwhelmed. Recovering, we set out to sketch a composite portrait of this 92 million-member cohort that’s sometimes called Generation Y. Use the six observations below to anticipate where this demographic megatrend may be headed, and what you can do to prepare:
1. Millennials’ early life experiences have left them singed but surprisingly optimistic.
For the demographic cohort born between 1980 and 1996, the Global Financial Crisis was a generation shaping event. Nobody saw it coming, least of all the young. But it fomented a somber transition into adulthood. To afford college, Millennials piled up unprecedented levels of debt ($28,400), only to find “not hiring” signs aplenty upon graduation. Many were forced to move back home with their parents and take minimum wage jobs. Only now is this beginning to change as the economy improves (four million new jobs were created in 2014), hiring continues, and confidence returns. What has been the psychic toll on Millennials? Pollsters are discovering surprising resilience and optimism. Pew Research’s study found almost half of Millennials think America’s best days are ahead of it. They are surprisingly confident about their own economic futures. Nine in 10 believe that “I’m going to eventually have enough money.” Collectively, the studies appear to indicate that, despite the economic blindside, Millennials still want to achieve the American Dream. The economic dislocation of this decade has not put limitations on their future visions. Yes, there will likely be an even greater divide between the hard-charging, risk-taking, tech-savvy members of this generation, and the entitled, immobilized minority that have returned home perhaps permanently to live with parents. But for most, there’s a quiet recognition that “if it’s going to be, it’s up to me” and a dogged determination to make it in what is being called the New Normal.
2. The most rewarded members of the Millennial Generation will be those who embrace lifelong learning.
In 2012, for the first time ever, one third of the nation’s 25 to 29 year olds had completed at least a bachelor’s degree. Four in ten had at least some college. Yet Millennials realize that they haven’t gotten much bang for their educational buck. That a college education today has a short shelf life. Outside of science and math, the typical education has woefully underprepared graduates for the world that Millennials discovered post-college. Every day in the workplace, Millennials encounter and are asked to solve problems with no precedent, and which have management stymied. They constantly need to do research and master new technology. Millennials most likely to succeed will be those who are, by nature or self-discipline, eager and constant lifelong learners, autodidactic, voracious readers. They will need to teach themselves more than they will be taught. With information at the touch of a smartphone, the biggest skill will be to make sense of it all, to connect the dots, to form a point of view, and to be able to communicate clearly, concisely and persuasively.
3. Millennials are not becoming entrepreneurs in record numbers.
But they expect to in the future. Contrary to popular impression, the share of people under age 30 who own private businesses has reached a 24 year low, according to data compiled by the Wall Street Journal from recently released Federal Reserve data. Only 3.6 percent of households headed by adults under 30 owned stakes in private companies, compared to 10.6 percent in 1989, when the Fed began collecting such data. Researchers aren’t sure what’s going on. One explanation is a total surprise: that Millennials have a low tolerance for risk. But think about it: with $28,400 in debt hanging over them, no wonder fewer Millennials are starting companies. Looking ahead, however, Millennials can be expected to do startups, and this trend may be only temporary.
4. Millennial purchasing power will transform the economy in big and little ways.
In ten years, visualize Millennials zipping around in driverless cars, while they text, chat with friends and colleagues in distant places, and complete projects at work. Far fetched? Hardly. With millions of the oldest members of Generation Y now in their 30s, we no longer have to speculate on what they will want in terms of products and services. Take housing, for instance. Here the common assumption was that Millennials would opt to remain downtown dwellers, and renters. A just released study from the National Association of Home Builders finds just the opposite to be true. Seventy five percent of Millennials say they eventually want to live in single-family homes, and 66 percent of them prefer to live in the suburbs. Only 10 percent say they want to stay in the central city. Among homebuilders venturing back into a devastated market, Millennials’ preferences are already being felt: according to the study, homes being built for Millennials are slightly smaller, laundry rooms have become essential, and built in home technology and energy saving devices are becoming de rigueur. Millennials are eschewing such features as high-end outdoor kitchens, two-story foyers and family rooms. Hint: Look to Millennials to surprise every industry with new and unexpected preferences and requirements, including yours.
5. Millennials will transform the world of work by joining the growing Freelance Economy.
Whether out of necessity or by choice, many Millennials will not ever hold regular employment. They’ll drive for Uber, deliver for Reddit, share space on airbnb, or work as temps or contract labor on an as needed basis for corporations. By 2020, according to a study by Sprint, these “guns for hire” will comprise 40 percent of the US workforce or about 60 million people, up from 42.6 million in 2006. And what are the implications? “A disturbing truth about the new economy is that it’s all on you,” observes economist Rana Foroohar in Time Magazine. “People who are smart, well-educated and entrepreneurial may well do better in this paradigm.” What about those who aren’t? Can a solid work ethic be developed in individuals who came from tumultuous or entitled upbringings? Again, this generation’s past is not its potential but the jury is still out. For employers, the immediate impact is cost savings from tighter and more flexible staffing. But clearly companies will have to work harder at engaging these temporary and contract workers, in a world where brainpower, creativity and customer empathy are key differentiators.
6. Millennials can be catalysts for innovation, but only if they are engaged.
Until 2015, Millennials have been intimidated by the dearth of jobs and have kept a low profile, with the exception being a highly publicized minority employed in the tech sector. These young workers have been pampered with game rooms, free food, and other benefits. But as competition heats up for the most talented and skilled and emotionally intelligent members of Generation Y, the next three to five years will be dramatically different from the post Great Recession era (2009 thru 2014). Employers will need to understand what Millennials want from work, and what they need to be engaged. Here, Deloitte’s annual surveys of Millennials are instructive. Seventy eight percent of Generation Y were influenced by how innovative a company was when deciding if they wanted to work there, but most say their current employer does not encourage them to think creatively. They want constant and immediate feedback, and coaching to improve performance. They want to work independently thru digital means in the future. They want the company they work to have a positive impact on society. They are used to being ranked and measured in endless tests and competitions, so they want metrics: they are accustomed to being evaluated numerically and objectively.
The arrival of the Millennial Majority can be looked at as business as usual, but this is dangerous. The Boomer dominant society has been slow to notice the potential of this game-changing generation. But now that the economy is improving, and millions of Millennials enter their peak earning years, vast changes are afoot. What is clear is that innovative thinking must take place at every level of the organization to adapt to and anticipate the needs and desires of these new citizens, consumer, colleagues and co-workers. My strong suggestion is that you make it a priority to study up on this rising generation. If your company lags in hiring Millennials, take a look at why. Rethink how you hire and recruit more Millennials. The innovators attitude is to welcome change instead of trying to resist it, to use it as a stepping stone, instead of a stumbling block. And by riding the wave of change, by helping to shape it. I hope that you are ready for the Millennial Majority, and I wish you all the best.
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Robert B. Tucker is the President of The Innovation Resource Consulting Group. He is a speaker, seminar leader and an expert in the management of innovation and assisting companies in accelerating ideas to market.