Millennials Now Most Numerous Generation In U.S. Labor Force
We knew this day would come.
Those kids are here in force – and they’re not. Getting. Off. Our. Lawn.
Yes, yes. We know how you feel.
Baby Boomers have been dominating the work force for two generations. So powerful was Post War Baby Boom amidst historic American prosperity in the 40s, 50s and into the early 60s that Generation X workers – the cohort born between 1945 and 1964, mostly to the WWII Generation and the “Silent Generation” dominated popular culture for the last 60 years – from Leave it to Beaver to those insufferable Eagles reunion concerts.
But those people are now retiring in droves. Generation X finally caught up with their numbers in the workplace just a few years ago, but that didn’t last long. , according to the Pew Research Center.
And their numbers will continue to rise, in absolute terms, yes, but also as a percentage of the work force population. Look at the trajectories in this graph:
As you can see, the Boomers are well into their decline phase as they retire, and the rightward curve in the line means that the trend is accelerating. Meanwhile, the number of Generation X workers is holding steady but no longer increasing. It’s the millennials that now command the ‘fat part of the Bell Curve.’ And in many industries, that’s precisely where HR managers should be focusing their attention.
A few more facts about the Millennials:
- They are the first generation to grow up with the Internet. They don’t know what the world was like before the Internet.
- They are less likely to have children than previous generations.
- They are less likely to be married. Much less. In fact, a 2014 report from the predicts that unless something changes soon, 30 percent of millennial women will be unmarried by age 30 –
- They value health benefits more.
- They are more diverse than previous generations. Whites only make up 50 percent of this generation – the lowest percentage in living memory (Yes, sharpshooters, we know there was a time when Native Americans outnumbered white settlers and their descendants. You know what we mean
- They bear the brunt of the outstanding student loans in this country: $1 trillion of it. And unlike personal residence debt, student loan debt is generally not dischargeable in bankruptcy.
What It Means for HR Professionals
A few years ago, companies could get away with ignoring the needs and desires of Millennial employees. They constituted a small number of relatively junior employees who were unlikely to stay anyway (and if they were being ignored, can you blame them?)
But now they represent a plurality of the work force, and they are beginning to wind their way into management positions. The best of them are already being wooed by employers competing for their talent, and any forward-thinking HR manager must respond to keep up with the Jones’s.
The Millennial Situation
It’s all well and good to talk about retirement plans and home equity. That’s what millennial workers are hearing their older co-workers talk about around the water cooler. But the millennial often has trouble thinking ahead that far. 401(k) matches? Those are for people with spare income after student loans and rent.
The massive student debt burden that Millennials carry means that they cannot contribute big sums to your 401(k) or SIMPLE plan. Their high debt-to-income ratios are making it tough for them to qualify for a nice apartment – let alone a car payment for reliable transportation (Used cars aren’t friendly to garage mechanics anymore like the were in the 80s and previously – and Cash for Clunkers took a lot of them off the road).
While Millennials value benefits at work – they aren’t used to buying insurance from agents at the kitchen table like their grandparents did – a generous 401(k) match just doesn’t have the same allure to a struggling millennial, squeezed between escalating rents and crippling student loan balances. They may not have been able to finish college at all. And don’t even mention homeownership to them. Homeownership rates are at a postwar low for 20 and 30-somethings, thanks to a variety of causes.
The time has come for a shift in HR priorities. Yes, keep your great 401(k) plans and the ace vision and dental plans. Your older employees value them tremendously. But think about the long-term future of the company, which is now being handed over to your millennials more and more by the day. What speaks to their reality?
1.) Cash. Yes, cash compensation is still king. Workers can use it anyway they like, and in theory derive their greatest ‘marginal utility’ per dollar from cash compensation (base pay, bonuses, commissions, etc.) than they do from any other form of compensation. And best of all, it’s still a fully deductible expense to the employer.
2.) Student Loan Repayment Programs. These are getting increasingly popular with both employers and younger workers. It’s the best of both worlds: Help paying down student loans allows workers to more easily refinance to a lower payment (making the debt dischargeable in bankruptcy thus potentially avoiding nightmare scenarios like ). Meanwhile, employers can fashion some sweeteners of their own – such as a commitment for a great employee to remain with the company for a certain number of years.
3.) Education assistance programs. Rather than pay off student loans, some employers provide tuition or cash assistance to employers pursuing education in subjects that benefit the employer. Indeed, Starbucks recently announced that it would pay for college education, through the bachelors’ level, for any employee that wished to complete an Special tax rules apply, however, depending on the education program. We’ll be discussing that in an upcoming column. Stay tuned!