When we last looked at Millennials, we said they were different from previous generations. And they are. But a new Federal Reserve report says most generations are different.
If so, then Millennials really are the same as the rest of us…
First, we better clarify who was born when. While Pew did a pretty good job, I added the labels:
Yes, Millennials are more racially diverse. But that has always been the trend. Moving through the generations, you can see an increase in diversity. The black bars (below) illustrate the drop in the size of the white population. They also show that the percent decrease was larger between the Boomers and Gen X (12%) than Gen X and the Millennials (4 1/2%):
For education, again, each generation continues a trend. Those with no more than a high school diploma go down by 5% while the size of the group graduating from college is increasingly up by 5%:
Similarly, the marriage rate descended with the arrival of each new generation. Influenced by cultural norms, the openness of the labor force, and education, we have been marrying less. Looking at 20-year olds, the largest decline in marriage was between the Silent Generation and the Baby Boomers.
In the following cohort graph, you can see the percent of the population that is married for each generation at each age:
For specific purchases, the story is the same. Millennials really are not buying fewer cars if we control for age and income. Doesn’t the red line look like the others for 20-37-year olds?:
But still they are different. Millennials were less affluent than Gen Xers at the same stage of life. In 2001, the typical Gen X household had a net worth of approximately $130,000. With fewer assets and more debt, a Millennial household in 2016 had $90,000. However, researchers at the St. Louis Fed hypothesize that Millennials just need to catch up. After all, if they have more education and are marrying later, then we should wait. They just need extra time in the labor force.
In each asset category, except for retirement accounts, Gen X had more whereas the balance flips with liabilities (but not mortgages):
Our Bottom Line: Generational Research
For businesses and government, it helps to know a generation’s characteristics. Looking at the life cycle, we can predict who buys what and when. Next, for a cohort effect, we can ask the impact of a unique event like the Great Recession. Lastly, the period effect can make a difference through the spread of a phenomenon such as technology use.
Putting it all together, we wind up with generational differences that are more similar than we think.
And finally, for a smile, this xkcd cartoon is worth a look:
My sources and more: The Federal Reserve was a good, basic, solid source for all from today. In this paper, researchers from the Federal Reserve asked if Millennials are different while here, the St. Louis Fed focused on income, assets and wealth. Much less basic and less statistically rigorous, this BusinessInsider article on industries destroyed by Millennials was interesting.
Our featured image is from The Washington Post.