3 Ways to Create Growth in A Millennial Dominant Economy
While we all await the next economic boom, current statistics indicate that the U.S. economy is actually nearing its potential as it relates to Gross Domestic Product (GDP). If our economy grows by 2.5%, we will have reached the Congressional Budget Office’s estimate of the nation’s economic potential by the end of the year. So how do millennials come into play? As of now, they make up the largest generation in U.S. history – the 2015 U.S. Census Bureau indicated that the population split was made up of 92 million millennials, 61 million Gen-X’ers, and 77 million baby boomers. Still, this group has had a difficult time finding consistent jobs. Last year, Generation Opportunity found that the unemployment rate for millennials was 12.8 percent compared to the national average of 4.9 percent. For the economy to grow, we may need to consider the ways in which this generation operates differently from prior generations. There are several factors that will help to determine the success of the U.S. economy in the hands of millennials.
Consider the New Work World
Gone are the days of “lifers.” Millennials are different from generations before them – they no longer have the desire to work for one company their entire lives. Accordingly, a lot of companies don’t have the desire or resources to manage employees for a lifetime. In fact, John Hagel III at Deloitte Center for the Edge reports that the average life expectancy of a company in the S&P 500 has dropped from seventy-five years in 1937 to fifteen years today. In order to keep millennials happy and employed (and as a result, help grow the economy), the modern company should create a culture in which employees don’t feel trapped. In addition, they need to consider the fact that millennial employees, even high-ranking ones, may not stay for more than a few years.
Acknowledge the Sharing Economy
Another identifying feature of the millennial workforce is the popularity of the “sharing” economy. Turned off by the debt that encumbered previous generations, millennials are disinclined to make large purchases like cars and houses, and instead turn to the sharing economy for support. Services within the sharing economy such as Uber and Airbnb have shifted jobs away from longstanding services like taxis and hotels. As more innovators and entrepreneurs create jobs that occupy this style of economy, they are likely to capture the interest of millennials throughout the workforce.
Adapt to Millennial Work Habits
A somewhat confusing facet of the millennial employee is the fact that many are actually self-employed. A lot of people who fall into this generation have taken to freelance work as opposed to aligning themselves with larger corporations. Millennials favor “experiences” over “things,” and prefer the flexibility that the freelance, or gig, economy provides. Another contributing factor has been the absence of jobs – many educated millennials felt forced into the freelance economy after failing to find a job after graduating. As more companies adapt to the idea that their best resources may come from freelance workers, this will help to support the growing economy. In addition, the emergence of more co-working spaces and maker spaces will help to fuel the millennial entrepreneurial spirit.
As smaller companies emerge and larger companies adapt to the millennial workflow, the U.S. economy will grow closer to the country’s peak GDP. Since millennials now dominate the population, it only makes sense that they will dictate economic growth. Yet, we don’t need to abandon all we know about American buying habits. As they age up, millennials will enter peak buying years for larger purchases like houses and cars – they just might take a little longer to get there.