Baby boomers, growing up in what appeared to be the never-ending prosperity of the 1950s and '60s, were at various times amused, mystified, and infuriated by the economic caution of their GI or Greatest Generation mothers and fathers, often labeling the penny-pinching of their parents “Depression mentality.”
Now, a half-century later, many of those same boomers, perhaps with a greater degree of understanding this time, are watching their own "millennial-generation" offspring (born from 1982 to 2003) develop the same habits of frugality and restraint that the millennials’ great-grandparents did in the 1930s and '40s. This change in attitude and behavior will impact America’s consumer spending and the way businesses and advertisers will need to approach their customers for decades to come.
The notion that millennials are willing to curb their spending might surprise some who have said the generation is self-centered and entitled, but it shouldn’t. The reasons for millennials' financial prudence are clear: Like the GI generation, millennials grew up in a time of relative prosperity, only to face a major economic downturn just as they were emerging into adulthood and the workforce.
Throughout the Great Recession that began in 2008, youth unemployment was almost
always nearly double that for the entire adult population. In January, when the nation’s unemployment rate was 7.9 percent, it was above 13 percent for those 16 to 30 years old.
In addition, millennials are not only the most highly educated generation in U.S. history, but also the generation with the most-ever student debt. A 2010 Pew report on America’s generations indicates that a majority (54 percent) of millennials had attended college, the first generation to have done that. Unfortunately, college costs and the loans millennials have assumed to pay those costs have risen sharply as well. In 2011, college seniors graduated with an average loan debt of $26,600, up 5 percent from just a year earlier.
As a February Pew report indicates, factors like these have shaped the consumer and financial behavior of millennials across a range of areas, from where they live, to how they travel and how they spend:
Where Millennials Live
More than a few observers have labeled millennials a generation exhibiting an extreme unwillingness to “launch” into full-fledged adulthood. One major reason for this is the economic pain visited upon the generation by the Great Recession. As many as three in 10 people ages 25-34 reported still living with their parents in 2011, something that might have benefitted both millennials and their parents from an economic and cultural perspective but still stigmatized many in this generation among older adults.
Even when millennials have been able and willing to strike out on their own, they have frequently rented rather than purchased their homes, causing some to label them “Generation Rent,” a designation first used in Great Britain, but one that seems to apply to many young Americans as well. As a result of remaining with their parents or renting, according to Pew, homeownership among 25- to 34-year-olds fell from 38 percent in 2001 and 40 percent in 2007 (years when virtually all in that age range were members of Generation X) to 34 percent in 2010.
This is not likely to be the final word on the subject; a 2010 Pew survey of millennials showed that they ranked homeownership behind only being a good parent and having a good marriage as an important value. But when millennials do move toward homeownership in overwhelming numbers, because of their “recession mentality” they are likely to be more cautious about the size and cost of their home and the type of mortgages to which they commit than previous generations have been.
How Millennials Get Around
As illustrated in the 1973 classic film, American Graffiti, at least since the time that today’s senior citizens were teenagers, obtaining a driver’s license and eventually a car and then cruising the city or hitting the highway has been a romantic rite of passage for young Americans. Millennials have become the first generation since the GI Generation for which this is no longer clearly the case. Between 2001 and 2009, young people reduced their average driving per year from about 10,250 miles to around 7,900 miles, a decline of about 23 percent. Economics is certainly a part of it: According to Pew, 73 percent of households headed by an adult younger than 25 owned or leased a vehicle.
By 2011, that number had fallen to 66 percent. As a result, among the households of those under 35, the percentage with outstanding vehicle debt declined from 44 percent to 32 percent between 2007 and 2010. But financial reasons are not the only ones explaining the decline of the car culture among millennials. Car Connection, a publication focusing on automotive research, points to changes in communication technology (the millennials’ preference for social networking lessens the need for face-to-face contact), location (millennials increasingly living in urban and suburban areas where cars are not as necessary to get around) and “eco-friendliness” (millennials are the most environmentally conscious generation) as reasons why millennials drive less than older generations did when those cohorts were the age that millennials are now.
All of this suggests that in the years ahead auto manufacturers and advertisers will have to focus on the values that millennials will bring with them when they buy cars—a desire for high-tech, environmentally friendly, cost-efficient autos that can be customized to the individual preferences of the owner to the greatest extent possible.
How Millennials Buy
In perhaps no other way have millennials imitated their GI Generation great-grandparents financially more than in their attitude toward accumulating debt (other than the student loans that have been forced upon them just to go to college). Pew research shows that the number of young households carrying a credit-card balance has dropped from 50 percent in 2001 and 48 percent in 2007 to only 39 percent in 2010. During that same period, the average credit-card debt declined from $2,500 to $1,700 among those households. As a result, the debt-to-income ratio (outstanding debt compared to annual income) has fallen from 1.63 in 2007 to 1.46 in 2010 within the households of 25- to 34-year-olds. By contrast, among older households it continued to rise slightly during those years (from 1.08 to 1.22). This suggests that for many millennials conspicuous consumption may be a thing of the past. Members of the generation are likely to carefully plan their consumption, avoiding credit whenever possible, buying only those things they truly believe they need, and seeking the best possible value for the things they do purchase.
John Gerzema and Michael D’Antonio, in their 2010 book, Spend Shift, described how, in the “post crisis” world, consumers would seek products and services that provide both “value and values.”) The millennial generation is driving this change. Businesses and advertisers would be wise to follow where millennials are leading.
In an effort to help the Republican ticket cut into President Obama’s massive advantage with millennial-generation voters, Paul Ryan delivered what may have been his best line of the 2012 campaign in his speech accepting the GOP vice presidential nomination: “College grads shouldn’t have to live out their 20s in childhood bedrooms staring up at fading Obama posters and wondering when they can move out and get going with life.”
One reason why Ryan’s appeal to millennials ultimately failed to have as much impact with them as he anticipated is that it painted an increasingly out-of-date and inaccurate picture of the current status of many millennials who, in growing numbers, are finding work and leaving their parental homes. This may be the first sign that a generation described or even accused of “failing to launch” is now on its way to shaping its own distinctive destiny and that of America in areas such as marriage, family formation, and child-rearing.
On Election Day, millennials—those born between 1982 and 2003—comprised a greater proportion of the electorate than they did in the Obama-mania election of 2008. Those members of the generation old enough to vote gave Obama a 60 percent to 37 percent margin over Mitt Romney, and allowed the president to capture the key battleground states of Florida, Ohio, Pennsylvania, and Virginia and thereby win reelection.
Still, there is a reason Paul Ryan’s comment may have struck home to at least some who listened to his speech. Millennials, to date, have been less likely to strike out on their own than the generations that immediately preceded them. A December 2011 Pew survey showed that, partially prompted by the impact of the Great Recession, nearly one in three young adults 25-34 still lived with their parents, three times the percentage of those that age who did so in 1980.
For a generation with close and mutually supportive relationships with its parents that millennials enjoy, this arrangement was not quite the disaster that pundits and politicians said it was and it now seems to be coming to an end.
This year, the jobless rate of those between 25 and 34 has dropped a little more sharply than it has for the overall population. It fell to 7.9 percent in November from 9 percent in January, compared with a decline to 7.7 percent from 8.3 percent for all workers. As a result of the improved employment picture and continued low home-mortgage rates, twentysomethings and those in their early 30s are moving into their own apartments and buying homes in increasingly greater numbers.
Interstate migration of young people is occurring at the highest rate in more than a decade as well. According to the Census Bureau, the nation has added more than 2 million households in the past year, many of them comprised of young adults. This was triple the annual average for the previous four years.
Now that more millennials are leaving their parents’ home and establishing their own households, one might anticipate that more of them will marry. So far, however, this hasn’t happened. If anything, American marriage rates are continuing to decline. According to a Pew analysis of census data, in 2010 barely half—51 percent—of Americans 18 and older were married in comparison with 72 percent in 1960. Over the same span, the median age for a first marriage had risen from 22.8 to 28.7 for men and from 20.3 to 26.5 for women. As a result, the share of 18- to 24-year-olds currently married dropped from 45 percent in 1960 to only 9 percent 50 years later. Among 25- to 34-year-olds the corresponding decline was from 82 percent to 44 percent. Perhaps most disconcerting, 39 percent of all American adults and 44 percent of millennials agree that “marriage is becoming obsolete.”
Not surprisingly, given the decline in marriage rates, birth rates have also declined and the average age of first-time parents has risen during the past several decades. From a peak of about 4.3 million before the Great Recession, annual births fell to 3.9 million in 2011. Between 1970 and 2010, the average age of first-time mothers rose by nearly four years (from 21.5 to 25.4). The average is closer to 30 on both coasts and among college graduates.
Still, these initial trends may not end up being the final words on the subject. Generational theorists indicate that the millennial generation is a “civic” generation. The last previous American civic generation was the G.I. or 'greatest generation." Like today’s millennials, that generation was forced by events—the Great Depression and World War II—to live with their parents and postpone marriage and family formation for a decade or more before eventually marrying in large numbers and parenting the baby boom generation, the largest cohort prior to the millennials. Nowhere were the hopes of this generation better stated than in the words of a demobilized G.I. in the 1947 Academy Award-winning film, The Best Years of Our Lives: “a good job, a mild future, and a little house big enough for me and my wife.”
In this, as in other aspects of life, millennials may turn out to be a lot like their G.I. generation great-grandparents. The Pew survey indicating that many millennials perceived marriage to be an institution of the past also found that 61 percent of all unmarried adults and nearly half of those believing marriage to be obsolete said they would like to wed.
Another Pew survey found that the three most important life priorities for millennials were being a good parent (52 percent), owing their own home (30 percent), and having a successful marriage (20 percent)—numbers almost identical to those of older generations.
This is not to say that, once they are formed, millennial families will be exactly like those of earlier generations. Millennials have the most gender-neutral attitudes of any generation. They are, perhaps, even the first female-driven cohort in U.S. history. Within millennial households, sex roles, financial contributions, and responsibility for household chores are likely to be more blurred than ever before.
But, as Paul Ryan should have learned, it is far too early to give up on the millennial generation and its chances of living the American Dream. History and the optimistic beliefs of millennials themselves tell a different story.
A recent Pew survey described an America that is more religiously diverse and less religiously observant than at any time in its history. In the two most publicized findings, Pew pointed out that for the first time ever, the number of Protestants in the U.S. population fell to less than half, while one in five Americans claimed no religious affiliation.
The implications of this change will be felt widely across U.S. politics, culture, and--based on Garrison Keillor’s tongue-in-cheek reference to the Pew research (“If you are not Lutheran, how will you get casserole?”)--even its eating habits. But nowhere will they be felt more strongly than by the nation's religious institutions.
Churches, synagogues, mosques, and temples will have to develop strategies for coping with the increasing religious diversity and decreasing willingness of Americans to affiliate with a faith, if those institutions are to prosper or even survive in the decades ahead. And because the changes in America’s religious landscape are being driven by the millennial generation (born between 1982 and 2003), those strategies will have to be focused on the nation’s youngest adults if they are to have any chance of success.
Millennials are almost twice as likely to be unaffiliated with a faith (30 percent compared with 17 percent for older generations), according to the April 2012 Pew values survey.
Not only is the millennial generation the most ethnically and racially diverse generation in U.S. history, it is also the most religiously diverse. Only 57 percent of millennials (compared with 75 percent of all older Americans) are Christians. Furthermore, only 23 percent of millennials are white Protestants (compared with 38 percent of older generations) and just 8 percent are white non-Hispanic Catholics (compared with 15 percent of older generations). At the same time, the millennial generation contains about one-third more Hispanic Catholics and twice the number of non-Christians as older generations.
Some might argue that if the country’s religious organizations only wait long enough, millennials will lose their youthful doubt and disbelief and seek out a faith. But, just as people are not invariably liberal in politics when they are young only to become conservative as they age, neither are they invariably skeptics about religion in their youth who convert to becoming believers in middle and old age. In fact, the opposite is the case.
According to Pew tracking surveys, millennials are twice as likely to be unaffiliated with a specific faith as were baby boomers in the 1970s when they were the age millennials are today. Similarly, millennials are one and one half times more likely to be unaffiliated than members of Generation X in the 1990s were when that generation was the nation’s twenty- and thirtysomethings. Moreover, Pew’s most recent research indicates that over the past five years, the lack of religious affiliation has actually increased slightly among Generation X-ers and Boomers.
While playing a waiting game is not likely to be fruitful for America’s denominations in eventually enlisting unaffiliated millennials, taking a more proactive stance that reflects the values of the generation could be. According to generational theorists, the millennial generation is a group-oriented civic generation, an archetype that is tolerant of diversity and focused on fixing society.
Those traits are evident in both the attitudes and behavior of millennials. Pew surveys indicate that solid majorities of millennials accept gay marriage, interracial marriage, and gay couples raising children. A National Journal survey reports that six in 10 white millennials said they had at least some neighbors of other races and two-thirds had interracial friends. The number of millennials who have neighbors and friends of different religions is undoubtedly even higher.
Millennials are also busy making things better for their community, their nation, and the world. In 2009, for example, 93 percent of those entering college had performed community service in high school and half expected to do so in college, while 35 percent of adult millennials continued their volunteer activities after completing their education. In that year, applications by millennials to the Peace Corps and Teach for America rose more than 40 percent from 2008.
Pew’s research indicates that large majorities of the disproportionately millennial religiously unaffiliated believe churches and religious organizations play a positive role in bringing people together and strengthening community bonds (78 percent) and in helping the poor and needy (77 percent).
Adopting a strategy that is based on those perceptions and is focused on the elements of its belief structure that emphasize service and inclusion rather than doctrine and exclusion could be the path to salvation for American religion in the millennial era.