01 November 2015

Millennials and More

"Demography is destiny."

--Richard Scammon and Ben Wattenberg

What do we really know about millennials, the demographic label which refers to a generation of young adults between 18-34?

First, it's a heavily populated cohort. A news release posted online by the U.S. Census Bureau in June 2015 shows that a portion of the population born between 1982 and 2000 now numbers 83.1 million and represents more than one-quarter of the nation's population. Their size exceeds that of the 76 million baby boomers.

According to the release, millennials are more diverse than the generations that preceded them, with 44.2% being part of a minority race or ethnic group (that is, a group other than non-Hispanic, single-race white). In addition, the youngest Americans are even more diverse than millennials, those more youthful than five years old. In 2014, this group became majority-minority for the first time, with 50.2% being part of a minority race or ethnic group.

The myths

While millennials, the children of baby boomers, may be among the most studied demographic in the nation's history, it's important not to generalize too much and think their behaviors and lifestyles are set for good. Like previous generations, they have unique characteristics (such as taking pets with them to job interviews) but continue to evolve in their tastes and lifestyles. As their finances improve, their consumption patterns will, too.

An article in TIME Magazine observed that "each country's millennials are different, but because of globalization, social media, the exporting of Western culture and the speed of change, millennials worldwide are more similar to one another than to older generations within their nations."

Nationally, more than 53 million workers are 18-34 years of age. Millennials have passed baby boomers and Gen-Xers to comprise the most significant part of the U.S. workforce, constituting 34% of all workers. By 2025, three-quarters of adult workers will be millennials.

Media fascination with any subject can lead to misunderstandings. The facts are not as interesting as the story. For example, here are millennial myths as reported on money.com:

1. Millennials don't like fast food. Fresh food is essential to this generation. Yet surveys indicate younger consumers are far more likely to eat at McDonald's than at Chipotle, Panera Bread, and other fast-casual restaurants. The Wall Street Journal reported that 75% of millennials said they go to McDonald's at least once a month, while only 20% to 25% of millennials visit a fast-casual restaurant that frequently.

2. Millennials want to live in cities, not suburbs. This myth is part of the media attention paid to urban millennials. Riding mass transportation or Uber, bicycles, or walking, is the picture we have of young adults in city centers. They hold college degrees and have the latest tech gadgets. (You don't hear much about 20-year-old single moms in small towns or fast-food workers in the suburbs trying to get by with only a high school diploma because they don't make good copy).   

Even if young people are moving to the cities, it doesn't mean that suburbs are out of bounds. On the contrary, census data show that in 2014 people in their 20s moving out of cities and into suburbs far outnumber those in the opposite direction. 

Two-thirds of millennial homebuyers prefer suburbs for settling down, with 10% choosing the city. 

3. Millennials hate cars. Maybe car buying is slow going in the early stages of a career due primarily to college debt or vehicle cost. Or both. Yet a Deloitte study focusing on Generation Y, another way of saying millennials, shows that more than three-quarters of this age group plan to purchase or lease a car over the next five years. Moreover, nearly two-thirds of millennials are in "love" with their vehicle.

4. Millennials don't want to own homes. Renting is better than owning. Yet a closer look uncovers the fact that millennials want to own homes. Again, the burden of college loans weighs on the home-buying decision initially. Bloomberg News reported that millennials made up 32% of home buyers in 2014, up from 28% in 2012. They are now the largest demographic in the market.

5. Millennials reject careerism and are allergic to being managed. This, too, seems to be contradicted by the facts. CEB, a consulting firm, polls 90,000 American employers each quarter. From reporting in The Economist Magazine, CEB finds millennials to be among the most competitive:  59% said competition is what gets them up in the morning, compared with 50% of baby boomers. They may spend more time messaging other millennials but do not have much faith in them. For example, 37% say they don't trust their peers' input at work.  

Forty-one percent of millennials agreed with the statement: "Employees should do what their manager tells them, even when they can't see the reason for it."   

Workers across different generations have much in common. They want roughly the same things regardless of when they were born: To be given interesting work, rewarded based on their contributions, and given a chance to work hard and get ahead. Those findings come from both CEB and the Center for Creative Leadership.

6. Millennials prefer a single life. But the demographic trends suggest they will increasingly be married, college-educated, well-to-do parents. The trend among young parents, who are now primarily the millennials, will be toward a growing majority of children being born inside marriages, says Demographic Intelligence. DI predicts that ultimately around 60% of the children of millennials will be taken to married parents, up from about 45% today. 

Other habits

We've all read about millennials and their attitudes concerning "entitlements," "work/life balance," and "job-hopping" (not unusual for this age group). Here are some other characteristics and habits:

-Fifteen percent of millennials live with parents. (Census Bureau)

-Millennials watch less TV and spend more time on smartphones than their parents.  

-Older millennials (25-34) watch more TV than their younger counterparts (18-24). 

-Fourteen percent of those 18-34 are cutting the TV cord, and 12% never had a TV subscription.

-Thirty-four percent say they sleep with their smartphones in bed.

-The top mobile news source for this group is the Huffington Post, with 9.2 million unique visitors to the app and site (recorded in March 2015). 

-About 67 million millennials listen to the radio each week. The country is the top format. 

-Only 27% of millennials say they attend religious services every week, compared with 38% of baby boomers and 51% of adults in the silent generation. Nearly one-third aged 25-32 now indicate their religious preference as "none," a nine percentage point jump in this group since 2007. (Pew Study)

In the coming year, we will monitor and report on other studies for Gen-X, baby boomers, and the silent generation. 

Closing thought

Of course, there are more market opportunities than just millennials. Multi-generational consumers are plentiful. The sweet spot for household spending and giving to charitable causes overlap among the 25 million older baby boomers and younger members of the silent generation, those between 65 and 74 years of age.      

Demographic transitions are always bookends--a younger cohort on one end with an aging populous on the other. However, this time the middle is populated by 40 million individuals known as Generation X. 

These combined forces are reshaping cultural norms and, in some cases, causing long-standing businesses to adapt or run the risk of a slow death. 

It's a situation and season that's hard to ignore.


(C) Bredholt & Co.