What will Millennials Kill Next?: A not-scientific but very heartfelt analysis
There are few things that make me angrier than the proclamation that millennials are killing industries. Even though is a widely claimed notion used for sensationalist economic headlines, millennials aren't killing industries--industries are killing themselves. Why? Because they haven't bothered to understand millennials.
So what do we really know about millennials?
Millennials: A Socioeconomic Briefing
There are two things that economists must understand about millennials. One: That they have fewer discretionary income credits (DIC) to spend on businesses than their precursors, the Baby Boomers and Gen X had. And Two: that they have an entirely different set of values caused by this income scarcity.
The first point can be summarized as thus: Millennials are less likely to be married than boomers, so less likely to have a shared income that can decrease spending on rent, vehicles, insurance, etc. But even if millennials are married, when adjusted for inflation, combined income for two married people is similar to what a married couple with one working partner (the husband) had in the 1950s. Millennials are working more hours, and more jobs, for fewer dollars and fewer benefits.
So what do those DIC look like when spread out over categories?
Let's say a Boomer couple starts out with 40 credits, from their income, and then the GI bill gave them 20 credits in the form of cheap housing loans, and then their career gives them 10 more credits in the form of retirement pensions and health insurance. They have a starting balance of 70 credits and spend it like this:
- 20 credits to home ownership
- 20 credits to status symbols (nice car, nice clothes, eating out and other "fun" expenditures)
- 10 credits to living expenses (gas, water, electric, groceries)
- 10 credits on sending their children to colleges
- 10 credits on vacations, investments, etc.
When you look at what millennials have, it is very different. Let's start them off with 40 credits. They do not have the bonuses of pensions or GI Bill loans--no credits added here. Their student debt, which is, on average $20,000-$40,000 upon completion, subtracts 10 credits. They will also likely be unmarried (thus halving their income) or have one of the partners stay home in lieu of daycare service, which subtracts 10 more credits. Now they have 20 credits. What are they going to do with that?
Whereas Boomers valued status symbols, family, and tidy suburban homes because they had the abundance of discretionary income required to value those things, millennials simply do not have the resources to do the same. They don't have middle class values because they aren't middle class. They value things on the lowest tiers of Maslow's hierarchy--shelter, health, community, and if they can afford it, education.
Let's look at what a millennial can do with their measly 20 credits:
- 10 credits to rent--if they're lucky, millennials can afford a meager apartment
- 5 credits to living expenses (gas, water, electric, groceries)--millennials will have to be frugal, avoiding the more expensive items at grocery stores and possibly forgoing automobiles in lieu of public transportation
- 5 credits on misc investments--when I say investments here, I might mean certification, small business plans, or a car. It is unlikely that millennials can afford the institutions of home ownership, continued education, vacations, or IRA funds
If millennials instead choose to live with their parents in their parents' government funded houses, then perhaps they keep the credits they would have spent on rent and use it toward more discretionary items like gym memberships, dinners out, or travel. But as you can see, millennials just don't have the same discretionary spending power as their Boomer and Gen X precursors. A poor man in the 50s could still own a farm and raise ten children. Could a millennial do that today?
It's time for economists to see that the "deaths" of industries like soap bars, doorbells, and McDonald's is not a decision made by millennials, but a larger fault caused by lack of well-paying jobs, lack of industry, and lack of investment in the millennial generation, itself. Instead of asking what the millennials have killed, they might try asking what the Boomers did. It would be nice to see a different take.