Episode 4: The Millennials Go Rogue

I hope so. Koalas are great, platypus is platypie, whatever they're calling are great. So hopefully we'll get some sort of like treats, like when dad brings back a gift from UM. This is the first time you're tuning in. Benchmark is the world most captivating podcast about the global economy and how all of its twists and turns affect you. This week, we're going to be talking about the economics of millennials. Tour. You and I are the perfect people to be talking about this, since both you and I

are actual millennials ourselves. I'm twenty eight and a half and tore you just turned twenty one that's not true. I'm but yeah, I think this should be really fun since we have a lot a lot to talk about, a lot of ground to cover. What's start with the definitions first? What actually is a millennial? What's the age range? Here? Different people define it different ways. Generations are kind of a weird construct, but they are useful in kind of

categorizing different groups of Americans. So what I like to use is Pew Research Center's definition, and they define it as people born after nineteen eighty and for general purposes, they look at age range eighteen to thirty four. So if you're born after, you probably not a millennial, although that's still up from the debate. What are they called people who are younger? I think they're calling them Generation z um, but who knows, that could totally change. So

we've officially run out of the alphabet. Yeah, dance, not a millennial, right, he's got to be older than it's definitely not a millennial. Well, this week the Millennials go Rogue On the Bloomberg Venture podcast, Tori, you and I brainstormed a bunch of myths about millennials, where you are, incidentally Bloomberg's premier expert on this topic. You're an expert on demographics in general, so you can navigate us through the actual numbers and tell us if each statement is

actually a real thing or if it's gross misconception. That's right, And I'm probably not an expert, but I definitely love demographics, so it should be a lot of fun awesome. Let's get to it. So millennial myths Number one. Millennials were the hardest hit generation in the recession. For false, I would say mostly true. It's sort of a for debate just because the generation right before the Millennials, generation X, was also super hardenedly hit. But let's talk about what

happened to millennials first. A lot of them were either just graduated from college or were in college um when the recession hit, so they probably definitely actually had a really hard time finding jobs. They may have been taking jobs that were below them in terms of education level. You know, you hear about the person who has a degree in marketing or whatever it was, and they took a job making coffee at Starbucks because that's how they could find. That comes with an income hit for many

many years afterwards. So they did get that. The generation right above them, generation X, they had homes, they had um money in stocks, definitely to a greater extent than millennials did. Millenials was so pretty young at that point, so they got hit pretty hard too. It's kind of a point to us. Well, I can fly at a to this because you know, I graduated from college in two thousand nine, so that means I was looking for a job in my senior year, which started in the

fall of two thousand eight when everything was collapsing. Yeah, I was a nightmare. I was looking enough to get this internship with Bloomberg and our took your office. But that was really my only lead, and if I didn't get it, I don't know what I would have done. Um. Tons of my friends didn't have jobs right out of college, and they did things here and there until they eventually found a job when the economy got better, or you know, they ended up going into grad school. So you know,

that makes a lot of sense to me. Yeah, it's crazy. I wasn't graduating twelves and things I've gotten slightly better, but people still having a hard time finding something that they wanted to do, you know, yeah, definitely, all right, Well, I guess that connects to our secondness, um, millennials are forever doomed as a result. Hopefully not speaking as a millennial, but like we just said, there comes with an income hit when you take a job that's at a lower

salary active at the beginning of your career. You know, those first few years of your career are the most important in terms of making headway in your income. If you take a job that's five thousand or ten thousand dollars below what you could have gotten in optimal circumstances, that effect can last and it's gonna take you a long time to catch up with that. So at least with their income, they're going to be hurt by that

for a few years. Right, So you're saying, like, even though I got a job straight out of college and continued to be employed since then, it's been six years for me since I graduated, I may have started with a lower salary than I otherwise would have had I graduated into a better economy, And so today I could be earning Even today, I could be earning less than I would have had the economy been better when I

graduated from college. Precisely, that's exactly the point. Yeah, well, that's the saying, UM, I hope my managers are listening to this. Let's move on to the next one. Millennials are the most over educated generation in the history of the US. So I don't know about over educated, but millennials are definitely very, very highly educated, more educated than

you know, Americans ever have been. So as the numbers here in, seven percent of people who are twenty five to thirty four had some kind of post secondary degree. So this is you know, a two year degree, a four year degree, or maybe a graduate degree. So almost half of the population of these young people had this kind of degree after high school. But that's pretty impressive. Um. This number was at about thirty percent back in the early nine nineties. So just over the past gosh, fifteen years,

this number has is in um a lot. Do you think it has anything to do with the recession? Like I said, so, a lot of my friends to re graduated if they couldn't find a job. Instead of just waiting around and not doing anything, a lot of them decided to go back to school. You know, they got additional degrees, like they went into master's programs or maybe PhD programs, and and a lot of people did this. So you definitely see a big bump after the recession in terms of the ratio of people who have post

secondary degrees. Interesting, moving on to the next one, Millennials are incapable of the laying gratification and they are not saving for retirement. This is probably my favorite thing to talk about. I love thinking about retirement. Don't know what that means, even though it's at least forty years exactly

exactly already planning it out in my head. But I think that this is a really interesting topic just because retire it and and social security is a huge topic for everyone in the US, um you know, presidential candidates are bringing it up, and in my personal experience, I found that millennials have kind of strong opinions about this. So let's let's break it up. Part about saving for retirement, you probably need to have a job to do that. And what we know is that the job market for

millennials has gotten much better. You know, if we look at the unemployment rate for people who are twenty five to thirty four years old, you know, so out of college, have been in the labor market for a couple of years now, hopefully it's at five point three percent. So that's a little bit higher than the overall level, which is five point one percent, but still pretty good. So

they have jobs. And what we're finding is that the ones who have access to jobs where their employers offer for oh one K plans, they are taking those, so they're actually contributing into their for one case exactly exactly. So there's this there's a study last year from the Transamerica Center for Retirement Studies. They actually found that seventy one percent of millennials who were offered for a one case or similar plans took part and contributed a median

eight percent of their salaries. And it sounds it sounds, it sounded like a lot to me. It was really surprising to me. But a lot of it has to do with for one case no longer being you have to opt into it. People are being automatically enrolled these days, right, so they are actually saving for retirement, and it might be because they just don't think social Security will be

there for them at all. You know, half of millennials don't think that there will be any money for them in the Social Security system by the time they were ready to retire. That number is coming from Pew gosh, that's that's really pessimistic. I don't know. I mean, I think I think social security will be around by the time we retire, even if it's kind of in a

different form than it is today. Yeah, you're in this second bucket that it's it's about say that the system will only be able to provide them with benefits at reduced levels, and then six percent think that they're going to get the level enjoyed by current retirees, which I think is extremely optimistic. Well, okay, so it is a growth misconception to think that millennials are just blowing all their money on the next fancy Nike sneakers or something

they actually are saving for retirement. Let's get on to the next myth. Millennials are not in the stock market. Um, they've shout away from the stock market, and whatever mean receivings they have, they've kept it in cash. Well, I think this connects to what we were just talking about really well, because if if they are participating in these four oh one k plans, the chances are they have some equity in there. Hopefully it's not all bonds, so they probably are in the stock market in some sort

of way. Do. We do have evidence. There are several studies that show that millennials say their risk of overse and if they don't want to be in the stock market, but if they're participating in four one k plans, and they probably are. So if we're looking at like, you know, directly manage stocks, probably to a lesser extent. Yeah, so it's better to just kind of keep it out of their own control if possible. Exactly. I'm okay with that, leave it to the pros. Okay, let's get onto the

next one. Um. Millennials shy away from credit, they don't take on loans. Yes, so definitely after immediately after the recession, there was a ton of evidence that should this. You know, they were plastic shy. I remember even a story trying to figure out what would happen with millennials credit reports because they didn't have a lot of it. They didn't

have credit cards. There's just no way. But there there has been evidence that they are gradually taking on more they're gradually using credit cards or taking on more debt, but they're not being super irresponsible about it. You know, We've seen research that shows that they have student loans and they're not if they have a ton of student debt, they're probably not out buying a house and acquiring housing debt.

I think what's interesting about the millennials is they definitely have different kinds of debt than probably our predecessors did. They have student loans alba wazoo. But they're not being completely grossly irresponsible in general with credit card debt, and they're probably not hopping into the housing market before they should be. Huh So, in some ways, millennials are more responsible than their predecessors, I would say, In some ways, yeah, I take that old people. Well, let's get on to

the next one. Millennials don't want to buy their own homes and they will only rent them, right. I think this is really this has huge implications for the housing market,

which is a pretty big pillar of the economy. You know, if we have people that never want to own homes, then they're probably not gonna spend a ton of money outfitting those homes with all the things that you would need, you know, buying washers and dryers and stoves and like all the furniture that you would need to fill a house versus my tiny eight hundred and fifty square foot apartment in d C. But what we've seen in the surveys is that millenials do want to own a home.

You know, I've seen estimates ranging from like sixty to eighty percent saying that they would like to at at some point own a home. And you know, they definitely have been behind the curve in terms of doing that putting those those desires into action compared to other generations. But also, like we said, they were hit pretty hard by the recession. They don't have a lot of just

extra money laying around, uh for a down payment. So the thinking goes that as the labor market improves, as they get more you know, we get more of them in jobs, they get higher incomes, etcetera, they'll be able to save about money for that down payment and to you buy a home. And we are seeing the household formation numbers slowly start to creep up, and that has great implications for the housing market. Do you think I'll

ever be able to buy a home here in San Francisco? UM, I don't know the answer to that might depress you. I might need to move about to the East day or something. This is a good one. So we are the Tinder generation and millennials only have one night stands and are consequently delaying marriage and babies, and all they care about is hooking up, and the economy is never going to benefit from the fruits of having a family. Well, I don't know about the one night stand thing. I

have not seen anything about that in the economic literature. Uh, millennials are certainly delaying um when they're getting married and when they have their first child. That age has been creeping up more and more and more. And you know, the longer you wait to have your first child, the fewer children you're likely to have too, So that means eventually a lower birth rate. You know, when you have fewer children, you end up spending. Your children are really expensive,

so like that means like less spending. Uh. It also means that over time, the demographic composition of the country shifts, so there are fewer working age people to support retirees, which for you and I, we are eventually going to retire and we eventually will really depend on our grandchildren to support us. So this definitely does have economic consequences. Yeah,

so I see. The mean age of mothers having their first child was twenty five point eight years in twelve and that's up from twenty one point four years in nineteen seventies. So, like you said, it's been a wide, slow climb up, but it's definitely there. And the interesting thing is, you know whether this is going to reverse at all, because I know a lot of demographers that I talked to chalked some of this up to the recession.

And you know, your people are going to be less likely to have children if they don't think that they can pay for them. You know, there's some speculation that as the economy recovers, so too will fertility, and the fertility rate actually does increase for the first time since two thousand and seven, so maybe there is some credibility to that, but we'll have to wait to see if more years bear that out. All right, this is a

good one. Millennials are slackers in the office and they just can't commit to a single job, so they end up job popping. I think it's interesting because it's a myth, and I think a lot of people know friends who who job hop. A lot, you know, only stay a year or two. I personally know people like that, But

it's not super been born out in the data. Is the only thing you know, across the US tenure ten years, so you know, the number of years that you're spending at a at a place has been tacking up slowly, slowly, slowly, just by small increments as well, and that may have something to do with the aging of the population. But even when you break it out at age groups and you look to to the age range that includes millennials, they're not Their tenure isn't shrinking by a ton, it's

it's basically flat. So there seems to be something a foot because I guess maybe all these anecdotes you here in the media and among friends and stuff can't aren't necessarily wrong, but it just hasn't started to show up in the data yet. I don't know. I think the jury is still out on that one. Well, tour, you and I have been with Bloomberg the whole time since we've graduated from college, so you know, it's been six years for me, how long has it been for you?

Three years? Three years, three years for you? And I think I know one other person who's had the same job since we graduated in my class, but everyone else has switch jobs a lot. But that could more be about the specific local economy. I'm in in San Francisco, Like the job market is just so hot for technical talent that it might just mean that, you know, people are switching for newer, better opportunities more often. Yeah, and we definitely. I mean, you can't argue that there's more.

There's a greater ability to switch jobs more often if you want, you know, with LinkedIn and all other sorts of job search platforms. Indeed, is another one that comes to mind. So if people want a job hop more, it's they're definitely able to. Well, I guess I've been happy with Bloomberg. So fun last one here, Millennials are amazing. You know, it's really funny because I don't think millennials themselves think that they're amazing. I read really we really.

I thought we were supposed to be like the ME generation. I read a really depressing report p that came out this month, and millennials, it finds, are far more likely than older generations to say that the terms self absorbed, wasteful, and greedy apply to people in their h cohort um. They're like the self exactly. They so fifty say that the term self absorbed describes their generation, compared with among

Gen xers of boomers. Wow, well here's a hypothesis. Maybe they're just more self aware, I mean, and that's not a bad thing. They p has also found that millennials are more accepting of homosexuality, interracial marriage, and hold more positive views of immigrants. So they're very multifaceted. Um, but I think self living is not an inaccurate way to describe them. And that's it for us today. Thanks again

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