The Economic Significance of Millennials on America ~ Emerald Quill

Feb 26, 2015

The Economic Significance of Millennials on America

2/26/2015 Celestine Green No comments

Millennials, the young Americans born between 1980 and the mid-2000s, are the largest generation in the U.S., representing one-third of the total U.S. population in 2013. With the first groupt of Millennials only in their early thirties, most members of this generation are at the beginning of their careers and so will be an important engine of the economy in the decades to come.

The significance of Millennials extends beyond their numbers. This is the first generation to have had access to the Internet during their formative years. Millennials also stand out because they are the most diverse and educated generation to date: 42 percent identify with a race or ethnicity other than non-Hispanic white, around twice the share of the Baby Boomer generation when they were the same age. About 61 percent of adult Millennials have attended college, whereas only 46 percent of the Baby Boomers did so.

Yet perhaps the most important marker for Millennials is that many of them have come of age during a very difficult time in our economy, as the oldest Millennials were just 27 years old when the recession began in December 2007. As unemployment surged from 2007 to 2009, many Millennials struggled to find a hold in the labor market. They made important decisions about their educational and career paths, including whether and where to attend college, during a time of great economic uncertainty. Their early adult lives have been shaped by the experience of establishing their careers at a time when economic opportunities are relatively scarce. Today, although the economy is well into its recovery, the recession still affects lives of Millennials and will likely continue to do so for years to come.

A recent White House report takes an early look at this generation’s adult lives so far, including how they are faring in the labor market and how they are organizing their personal lives. This generation is marked by transformations at nearly every important milestone: from changes in parenting practices and schooling choices, to the condition of the U.S. economy they entered, to their own choices about home and family.

Millennials are also the generation that will shape our economy for decades to come, and no one understands that more that the President. It’s why he has put in place policies to address the various challenges their generation faces. This includes policies such as: making student loan payments more affordable; promoting digital literacy and innovation; pushing for equal pay and paycheck fairness; supporting investments and policies that create better-paying jobs; connecting more Americans to job training and skills programs that prepare them for in-demand jobs; supporting access to credit for those who want to buy a home; and increasing access to affordable health care. And it’s why the President will continue to act with Congress and on his own where he can to build on this progress to expand opportunity for Millennials and all Americans.

The report data shows many important facts about how Millennials effect the economy. Here are just a few of those facts reported.

Millennials now represent the largest generation in the United States, comprising roughly one-third of the total population in 2013. What’s more, the largest Millennial one-year age group is now only 23. This means that the Millennial generation will continue to be a sizable part of the population for many years.

The report data shows many important facts about how Millennials effect the economy. Here are just a few of those facts reported.

Millennials have been shaped by technology.

The past few decades have witnessed astounding advances in technology and computing. Since personal computers were introduced to schools in the late 1970s, technology companies have innovated at startling speed, often rolling out a groundbreaking new platform or computer model every year. Because much of this period of innovation coincided with Millennials’ childhoods, it has shaped the ways that Millennials interact with technology and seems to have affected their expectations for creativity and innovation in their own work lives.

Millennials are more connected to technology than previous generations and a quarter of Millennials believe that their relationship to technology is what makes their generation unique. While all generations have experienced technological advances, the sheer amount of computational power and access to information that Millennials have had at their fingertips since grade-school is unparalleled. Computational processing power has roughly doubled every 2 years, and storage prices continue to drop. In 1980, IBM’s first gigabyte hard drive weighed 550 pounds and cost $40,000.6 Today, consumers have access to 3 terabyte hard drives — 3000 times the size — that weigh under 3 pounds and cost around $100. Under these trends, Millennials have come of age in a world in which the frontiers of technology have appeared unlimited.

In addition to creating opportunities for entrepreneurship, advances in computer processing power, along with widespread access to cell phones and the Internet, have changed how Millennials communicate and interact with one another. Millennials use social media more frequently and are even more likely to sleep near their cell phone. Three-quarters of Millennials have an account on a social networking site, compared with only half of Generation Xers and less than a third of the Baby Boomers. The impacts of these practices have extended beyond Millennials’ peers to their families. For instance, the Wall Street Journal reported that this is the first generation to also have tech savvy parents, and that some Millennials use texting or online chat to have running conversations with their parents throughout their day.

Millennials tend to get married later than previous generations.

Since 1950, the median age at which both men and women have married has steadily increased. In 1950, men first married at age 22.8 and women at age 20.3; by 2013 the median marriage age increased by more than 6 years for both genders, reaching 29.0 and 26.6 for men and women respectively. As more young adults delay marriage, the fraction of young adults who are currently married has fallen. Millennials have continued on this path and are marrying later, with more of them remaining unmarried in their 20s. In 2013, only 30 percent of 20 to 34 year-olds were married, compared to 77 percent in 1960.

Many factors explain the later marriages including the fact that those with more education (a group whose size has been increasing over time) tend to marry later. However, college-educated Millennials are more likely than the rest of their peers to be married. This reflects a shift in marriage-education patterns: in 1980, those with a college-degree were the least likely to be married. This difference is largely reflective of changes in the marital behavior of women. For much of history, women with college-degrees were the least likely among their peers to ever marry. In more recent decades, college-educated women caught up, largely by marrying at later ages. Delayed family formation may also be a rational response in achieving both career and family aspirations. Most Millennials grew up in a household where all parents worked, and their children are even more likely to live in such a household. Accordingly, most Millennials will be working at the same time they are helping care for their families. For instance, among college graduates, 20 percent had not married by age 35 in 2000, yet 43 percent of those married within the next 10 years. The fact that so many now marry later makes it difficult to predict what marriage rates will ultimately look like for this generation.

Although Millennials are delaying marriage, this does not mean that they do not want to marry. As high school seniors, over 80 percent of Millennials say that they think that they will marry, more than Generation Xers and Baby Boomers did at similar ages. Similarly, they are more likely to believe that they will have kids. Later marriage and longer time in school are also connected to delaying family formation until later in life. Data shows that age at first birth has risen over time for women with advanced education, particularly for those with an advanced degree.

Balancing family and work obligations is difficult for many workers, particularly those who lack access to flexible work arrangements or paid leave. While Millennials are more likely than older workers to have access to flexibility in where and when they work, only 45 percent have access to paid leave (compared to about 66 percent of older workers). Millennials report that having a career and having a family is important, but at this stage, they may be focusing on establishing a career. Family formation may come once their careers are established, and they have higher earnings and are more likely to have access to workplace polices that help them balance work and family.

Millennials are less likely to be homeowners than young adults in previous generations.

Entering adulthood during the Great Recession and recovery has not only affected Millennials’ schooling and employment decisions, but also their housing and household formation patterns. In the aftermath of the Great Recession, the share of 18 to 34 year-olds living with their parents increased from 28 percent in 2007 to 31 percent in 2014 – which is a notable increase even if the actual magnitude falls well short of some popular perceptions. Correspondingly, the pace of household formation is low and the “headship rate” among Millennials – the rate at which Millennials head their own households – has fallen. With fewer Millennials as independent renters or homeowners, the demand for housing and the pace of residential investment is likely lower than the level implied by more typical rates of household formation and headship

Millennials are much more likely to have health insurance coverage during their young adult years.

As a result of the Affordable Care Act, Millennials are much more likely to have health insurance coverage than young workers in the past. Since the Affordable Care Act’s dependent coverage provision went into effect in 2010, the uninsured rate among Millennials has fallen by 13.2 percentage points. Increased health insurance coverage will likely translate into improved access to health care, health outcomes, and financial security. It may also have important labor market benefits: because the Affordable Care Act has made it easier for individuals to purchase their own health insurance, young adults are now better able to choose a job that fits their career goals, without having to worry about access to health insurance coverage.

For more information on Millennials and their effect on the economy, review the full White House report.