| Clash of Generations - Boomers vs. Millennials: Attitude Change Will Disrupt Wall Street and Corporate America Posted: 29 May 2014 11:41 PM PDT As boomers and gen-Xers hand over the economic reins to millennials, a once in a multi-generational attitude shift comes with it. Unlike boomers and gen-Xers focused whose primary focus was on money and "getting ahead" lifestyles, millennials have more of a depression-era survival mentality coupled with a completely different set of values. The ensuing attitude change has profound implications, and that is the focus of the Brookings study: How Millennials Could Upend Wall Street and Corporate America. Let's start with a couple of demographic definitions then a look at the study. - Boomers: Born 1946-1964
- Generation X: Born 1965-1981
- Millennials: Born 1982-2003
Brookings Study ExcerptsMillennial Dominance
Millennial Values
By 2020, Millennials will comprise more than one of three adult Americans. It is estimated that by 2025 they will make up as much as 75 percent of the workforce. Given their numbers, they will dominate the nation's workplaces and permeate its corporate culture. Thus, understanding the generation's values offers a window into the future of corporate America.
In the future, most Americans, taking their cue from Millennials, will demonstrate a greater desire to advance the welfare of the group and be less concerned with individual success. They will be less worried about being guided in their daily decisions by software and more intrigued by the opportunities it offers. Even without any major environmental disaster, they will display a greater reverence for the environment and less interest in the acquisition of things as opposed to experiences.
It will be a world that is radically different than the one those who wield power today have grown accustomed to leading. The Baby Boom generation, born between 1946 and 1964, has made confrontation the touchstone of its existence. In their youth, Boomers protested the Vietnam War, or fought against those who did. As they aged, both conservative and liberal Boomers polarized America's politics, making compromise morally unacceptable. Throughout their lives, Boomers have honed conflict and competition to a fine art.
As Boomers begin to leave the corridors of power in Congress and the executive suites of corporate America, they are being replaced by members of Generation X, who are largely devoted to the pursuit of the bottom line—preferring speed over reflection and autonomy over collective decision-making.
Silicon Valley CEOs, many of whom are drawn from the ranks of Generation X, look with disdain on the good old boys network of their Wall Street counterparts and are eager to leverage the technologies they have developed to gain advantage in the marketplace over the older, more established titans of the media and telecommunication sectors.
This is not to suggest that Millennial CEOs are, or will be, any less interested than Boomers or Gen-X'ers in assuring the success of the enterprises they now, or eventually will, lead. Rather, it is to emphasize the importance of recognizing the differences in how Millennials define success and the way they make decisions in order to envision the future of corporate America.
Millennials as Consumer-Workers
Cone Communications has been tracking the attitudes of American consumers toward businesses' involvement in social issues. As Millennials became a larger and larger share of the marketplace, the idea of "cause marketing" has evolved from a nascent promotional strategy to the key differentiator, not only in deciding what to buy, but who to trust and reward with brand loyalty.
Cone's 2013 survey of over 1,200 U.S. adults found Millennials to be the generation most focused on corporate social responsibility when making purchasing decisions.
Almost all Millennials responded with increased trust (91%) and loyalty (89%), as well as a stronger likelihood to buy from those companies that supported solutions to specific social issues (89%). A majority of Millennials reported buying a product that had a social benefit and 84% of a generation that accounts for more than $1 trillion in U.S. consumer spending considered a company's involvement in social causes in deciding what to buy or where to shop. In 2013, 89% of all American consumers said they would consider switching brands to one associated with a good cause if price and quality were equal. That percentage was 23 points higher than when Cone first did its survey in 1993, at a time when no Millennials were part of the adult population.
Not only are Millennials creating the need for companies to pay attention to their corporate social responsibilities, but they are also leading a shift in buying behavior away from the glorification of consumerism to a more measured view of what's important in life. Young & Rubicam's brand attribute survey in 2009 of 2,300 adults found that a majority of Millennials belonged to a segment labeled "Spend Shifters." Not only did three-fourths of the "Spend Shifters" say they "made it a point to buy brands from companies whose values are similar to my own," almost all of them (87.5%) disagreed with the statement that "money is the best measure of success."
The authors of Spend Shift, John Gerzema and Michael D'Antonio, pointed to a major shift between 2005 and 2009, just as the first wave of Millennials became adults, in what consumers were looking for in the companies with which they wanted to do business. Attributes such as exclusive (-60%), arrogant (-41%), and sensuous (-30%) fell from favor while values more associated with those of the Millennial generation rose dramatically.
Kindness and empathy rose 391 percent in these five years, the biggest shift in attitudes ever seen in the seventeen year history of the survey. Other values associated with the generation, such as friendly (+148%) and socially responsible (+63%), also rose dramatically. These shifts in consumer attitudes driven by Millennial values will give every American corporation that wants to attract customers, not to mention workers and investors, no choice but to deliver on a commitment to make the world a better place one cause at a time. Companies will also have to behave a lot more nicely than they are accustomed to in order to deliver those results, more like the characters in "Her" than those in "The Graduate."
Evidence that these attitudes represent a generational shift, not one based simply on age, can be found in a benchmark survey of 1,250 insurance company employees conducted for LifeCourse Associates in 2012. Almost two-thirds of Millennial employees said they wanted their employer to contribute to social or ethical causes they felt were important. Only half of the Boomers and older Gen Xers surveyed felt the same way.
This desire on the part of Millennials for their daily work to reflect and be a part of their societal concerns will make it impossible for corporate chieftains to motivate Millennial employees simply by extolling profits, or return on investment for their shareholders, or even employee salaries. For example, a recent Intelligence Group study found that almost two-thirds (64%) of Millennials said they would rather make $40,000 a year at a job they love than $100,000 a year at a job they think is boring.
Millennials Think About Money Differently
In its latest study of the Millennial Generation, Millennials in Adulthood, the Pew Research Center found that America's youngest adults were the least trusting of any generation.
Only 19 percent of Millennials agreed with the statement that "most people can be trusted," a percentage that was about half of all other older generations.
A recent survey by MFS Investment Management found that nearly half of Millennials "never feel comfortable investing in the stock market." The survey also showed Millennials keep more of their assets in cash, less in stocks, and, in spite of their relative youth, have a shorter time horizon—less than five years—for their investments than Boomers or Gen Xers.
A report by UBS Wealth Management in the Americas described Millennials as "the most conservative generation since the Great Depression" with regard to its savings habits. According to UBS's research, the average investor aged 21 to 36 has 52 percent of their savings in cash, compared to 23 percent for other age groups.
Clearly, one reason for this avoidance of the stock market stems from the same experience of extreme volatility and risk that the Millennials' GI Generation great grandparents experienced when they were coming of age during the Great Depression. A 2013 study by Accenture confirmed these attitudes, with 43 percent of Millennials identifying themselves as conservative investors, compared with 27 percent for Generation X and 31 percent for Boomers. But the survey also uncovered a deeper reason than just the Great Recession for this cautious investing behavior by Millennials.
The Accenture survey found high levels of mistrust of financial institutions among Millennials and a greater reliance on the Internet, social media, and personal networks for financial advice. As Kelsey Raycroft, a Boston-based Millennial put it, "The personal connection is important to me, especially with money stuff.... When I see these commercials with big companies, I'd rather go to somebody I trust."
In fact, this deep level of distrust toward the banking industry led the authors of the Millennial Disruption Index to identify the financial sector as the industry most likely to experience severe disruption in its business model. Their three-year research study of more than 10,000 Millennials also found that of the ten least-liked brands among members of this generation four belonged to the nation's most powerful banks—J.P. Morgan Chase & Co., Bank of America Corp., Wells Fargo & Co., and Citigroup. Seventy-one percent told the researchers that they would "rather go to the dentist than listen to what banks are saying." Report Merits a Closer LookThere is much more in the 19-page PDF that merits a closer look. For example, the study contains a discussion of what working 9-to-5 means at a place like Goldman Sachs. The short synopsis is that for the first couple of years, 9-to-5 means 9AM to 5AM, seven days a week. In the list of companies where millennials would like to work, there are some non-surprises like Google and Apple, but also some real surprises like the FBI and CIA. St. Jude's Children's Hospital, also a surprise, was the number one choice. Major Attitude ShiftI have been writing about the implications of changing attitudes since at least 2008. Flashback June 25, 2008: This is what I said about attitude changes in Peak Credit Secular Attitude Change Underway
There is a secular attitude change happening right now. Boomers close to retirement are now (finally) scared to death as the equity in their houses has been vaporized. School age children are seeing homes foreclosed, and families destroyed over debt. The American consumer, who nearly everyone thinks will be back as soon as the economy picks up are mistaken.
Secular shifts like these come once in a lifetime. Sadly it's too late for many cash strapped boomers counting on equity in their houses for retirement.
Lessons Of The Great Depression Forgotten
The lessons of their great grandfathers who lived in the great depression era were forgotten. Over time, everyone learned to ignore the dangers of debt, risk, and leverage. Belief in the Fed and the government to bail out any problem are ingrained. Bank failures are distant memories.
Anyone and everyone who wanted credit got it, and on the easiest of terms: subprime, pay option arms, reckless leverage, and covenant lite debt and toggle bonds that allowed debt to be paid back with more debt. That's what it takes to hit a peak.
Peak Credit
Peak credit has been reached. That final wave of consumer recklessness created the exact conditions required for its own destruction. The housing bubble orgy was the last hurrah. It is not coming back and there will be no bigger bubble to replace it. Consumers and banks have both been burnt, and attitudes have changed.
It took nearly 80 years for people to get as reckless as they did in 1929. 80 years! Few are still alive that went through the great depression. No one listened to them. That is the nature of the game. The odds of a significant bout of inflation now are about the same as they were in 1929. Next to none.
Children whose parents are being destroyed by debt now, will keep those memories for a long time. Social and Stock Market ImpactsPeak credit has been surpassed, but a substantial portion of the rise in credit is in the form of student loans that cannot and will not be paid back. Importantly, millennial attitudes towards cars and other material goods is not the same as their parents. Moreover, student debt and a dearth of high-paying jobs ensures that housing formation will stay depressed, even if attitudes did not change. As boomers retire, they will need to draw down on both their stock market portfolios and their savings (assuming they have either). Economic support from relatively low-paid millennials so that boomers can maintain their lifestyles will be massive. Millennials will assist aging boomers via taxation and by overpaying for Obamacare. Higher taxes coupled with increasing time commitments to help care for aging parents will take a toll. And because boomers live longer than ever, the economic drain and time commitment from millennials will increase every year. This has downward implications on the economy and the markets, especially in light of millennial-mistrust in stocks and the massive amount of student debt many of them carry. Wall Street is not prepared for the major attitude and demographic shifts that are now underway. Are you? In a related post, particularly for millennials searching for jobs, please consider BLS Employment Projections Through 2022: How Many Jobs Require a College Degree?Mike "Mish" Shedlock http://globaleconomicanalysis.blogspot.com |
| Illinois Has Worst Pension Crisis, Needs Boldest Reforms, Not More Tax Hikes Posted: 29 May 2014 02:44 PM PDT Governor Pat Quinn passed Illinois' largest tax hike on record immediately after he was elected. That tax hike was supposed to be temporary. It won't be, if governor Quinn and House Speaker Michael Madigan get their way. Madigan, Quinn, and other Illinois politicians are attempting the same worn-out, taxpayer-unfriendly, method of threatening massive cuts in services if taxes are not permanently hiked. And it will not stop there. It should not have to be that way, says Ted Dabrowski at the Illinois Policy Institute. Via email, Ted writes ... Illinois politicians such as Chicago Mayor Rahm Emanuel and Cook County Board President Toni Preckwinkle are offering city and county residents the following choice when it comes to government pension reform: either pay higher property taxes or watch core government services get cut.
But that's a false choice.
There's no question that Chicago, Cook County and the state of Illinois desperately need pension reform. But instead of threatening service cuts and property tax hikes, Illinois should take a cue from states such as Oklahoma that are passing real reform.
These states are embracing self-managed plans, such as 401(k)-style accounts, to increase retirement security for their workers and to bring back certainty to state and local budgets.
This week, Oklahoma's House of Representatives passed a bill that moves some new state workers into 401(k)-style plans.
The bill now moves to the state Senate, and Gov. Mary Fallin is expected to sign the reform into law.
Once signed, Oklahoma will join Michigan and Alaska in requiring new employees to participate in defined contribution, or DC, plans.
Michigan made the move in 1996; Alaska followed suit in 2005.
Six other states already offer optional DC plans for some of their employees. Employees in Florida, Montana, South Carolina, North Dakota, Ohio and Colorado can choose between staying in the traditional defined benefit, or DB, plan or moving to a 401(k)-style plan.
Another 10 states offer either mandatory or optional participation in hybrid retirement plans that combine both DB and DC plans. Six of those states – Georgia, Utah, Michigan (public schools), Rhode Island, Virginia and Tennessee – passed mandatory hybrid systems for new employees after the Great Recession.
Fortunately for Illinois, a model for such reform already exists within the state.
Illinois' State Universities Retirement System has offered an optional 401(k)-style plan to its employees for more than 15 years.
Plan participants who opt in are required to contribute 8% of their salary toward the self-managed plan. The state contributes an additional 7% into the member's account. In total, employees put away the equivalent of 15% of their salary yearly into a portable account that the employee, and not the government, legally owns and controls.
More than 17,500 state university workers have opted into the self-managed plan since its inception.
Illinoisans should reject higher property taxes as the solution to the crisis. Instead, they should demand that politicians go back to the drawing board and follow the lead of states that have enacted real reform.
Illinois has the worst pension crisis in the nation. That's why Illinoisans should demand the country's boldest reforms.
Ted Dabrowski
Vice President of Policy Oklahoma was the latest state to move away from defined benefit plans to contribution-based plans or hybrids. For a look at how these plans have evolved over time, please see Oklahoma pension reform: 401(k)-style plans for new state workers. Mike "Mish" Shedlock http://globaleconomicanalysis.blogspot.com |
| BLS Employment Projections Through 2022: How Many Jobs Require a College Degree? Posted: 29 May 2014 09:08 AM PDT Inquiring minds are taking a look at the BLS Occupation Forecast Through 2022. | Occupations with the Most Job Growth, 2012 and Projected 2022 (Numbers in Thousands) |
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| 2012 National Employment Matrix Title | Code | Employment | | Change, 2012-22 | | Median annual wage, 2012 |
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| | 2012 | 2022 | Number | Percent | | | Total, All Occupations | 00-0000 | 145,355.8 | 160,983.7 | 15,628.0 | 10.8 | $34,750 | | Personal care aides | 39-9021 | 1,190.6 | 1,771.4 | 580.8 | 48.8 | 19,910 | | Registered nurses | 29-1141 | 2,711.5 | 3,238.4 | 526.8 | 19.4 | 65,470 | | Retail salespersons | 41-2031 | 4,447.0 | 4,881.7 | 434.7 | 9.8 | 21,110 | | Home health aides | 31-1011 | 875.1 | 1,299.3 | 424.2 | 48.5 | 20,820 | | Combined food preparation and serving workers, including fast food | 35-3021 | 2,969.3 | 3,391.2 | 421.9 | 14.2 | 18,260 | | Nursing assistants | 31-1014 | 1,479.8 | 1,792.0 | 312.2 | 21.1 | 24,420 | | Secretaries and administrative assistants, except legal, medical, and executive | 43-6014 | 2,324.4 | 2,632.3 | 307.8 | 13.2 | 32,410 | | Customer service representatives | 43-4051 | 2,362.8 | 2,661.4 | 298.7 | 12.6 | 30,580 | | Janitors and cleaners, except maids and housekeeping cleaners | 37-2011 | 2,324.0 | 2,604.0 | 280.0 | 12.1 | 22,320 | | Construction laborers | 47-2061 | 1,071.1 | 1,331.0 | 259.8 | 24.3 | 29,990 | | General and operations managers | 11-1021 | 1,972.7 | 2,216.8 | 244.1 | 12.4 | 95,440 | | Laborers and freight, stock, and material movers, hand | 53-7062 | 2,197.3 | 2,439.2 | 241.9 | 11.0 | 23,890 | | Carpenters | 47-2031 | 901.2 | 1,119.4 | 218.2 | 24.2 | 39,940 | | Bookkeeping, accounting, and auditing clerks | 43-3031 | 1,799.8 | 2,004.5 | 204.6 | 11.4 | 35,170 | | Heavy and tractor-trailer truck drivers | 53-3032 | 1,701.5 | 1,894.1 | 192.6 | 11.3 | 38,200 | | Medical secretaries | 43-6013 | 525.6 | 714.9 | 189.2 | 36.0 | 31,350 | | Childcare workers | 39-9011 | 1,312.7 | 1,496.8 | 184.1 | 14.0 | 19,510 | | Office clerks, general | 43-9061 | 2,983.5 | 3,167.6 | 184.1 | 6.2 | 27,470 | | Maids and housekeeping cleaners | 37-2012 | 1,434.6 | 1,618.0 | 183.4 | 12.8 | 19,570 | | Licensed practical and licensed vocational nurses | 29-2061 | 738.4 | 921.3 | 182.9 | 24.8 | 41,540 | | First-line supervisors of office and administrative support workers | 43-1011 | 1,418.1 | 1,589.6 | 171.5 | 12.1 | 49,330 | | Elementary school teachers, except special education | 25-2021 | 1,361.2 | 1,529.1 | 167.9 | 12.3 | 53,400 | | Accountants and auditors | 13-2011 | 1,275.4 | 1,442.2 | 166.7 | 13.1 | 63,550 | | Medical assistants | 31-9092 | 560.8 | 723.7 | 162.9 | 29.0 | 29,370 | | Cooks, restaurant | 35-2014 | 1,024.1 | 1,174.2 | 150.1 | 14.7 | 22,030 | | Software developers, applications | 15-1132 | 613.0 | 752.9 | 139.9 | 22.8 | 90,060 | | Landscaping and groundskeeping workers | 37-3011 | 1,124.9 | 1,264.0 | 139.2 | 12.4 | 23,570 | | Receptionists and information clerks | 43-4171 | 1,006.7 | 1,142.6 | 135.9 | 13.5 | 25,990 | | Management analysts | 13-1111 | 718.7 | 852.5 | 133.8 | 18.6 | 78,600 | | Sales representatives, wholesale and manufacturing, except technical and scientific products | 41-4012 | 1,480.7 | 1,612.8 | 132.0 | 8.9 | 54,230 |
The above table is by the BLS. In the following table, I stripped out all the occupations that I believe should not realistically require a college degree. Here are the results. | Degree Requiring Occupations with the Most Job Growth, 2012 and Projected 2022 (Numbers in Thousands) |
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| 2012 National Employment Matrix Title | Code | Employment | | Change, 2012-22 | | Median annual wage, 2012 |
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| | 2012 | 2022 | Number | Percent | | | Total, Degree Requiring Occupations | | 17,500.3 | 20,231.0 | 2,730.7 | 15.6 | | | Registered nurses | 29-1141 | 2,711.5 | 3,238.4 | 526.8 | 19.4 | 65,470 | | Secretaries and administrative assistants, except legal, medical, and executive | 43-6014 | 2,324.4 | 2,632.3 | 307.8 | 13.2 | 32,410 | | General and operations managers | 11-1021 | 1,972.7 | 2,216.8 | 244.1 | 12.4 | 95,440 | | Bookkeeping, accounting, and auditing clerks | 43-3031 | 1,799.8 | 2,004.5 | 204.6 | 11.4 | 35,170 | | Medical secretaries | 43-6013 | 525.6 | 714.9 | 189.2 | 36.0 | 31,350 | | Licensed practical and licensed vocational nurses | 29-2061 | 738.4 | 921.3 | 182.9 | 24.8 | 41,540 | | First-line supervisors of office and administrative support workers | 43-1011 | 1,418.1 | 1,589.6 | 171.5 | 12.1 | 49,330 | | Elementary school teachers, except special education | 25-2021 | 1,361.2 | 1,529.1 | 167.9 | 12.3 | 53,400 | | Accountants and auditors | 13-2011 | 1,275.4 | 1,442.2 | 166.7 | 13.1 | 63,550 | | Medical assistants | 31-9092 | 560.8 | 723.7 | 162.9 | 29.0 | 29,370 | | Software developers, applications | 15-1132 | 613.0 | 752.9 | 139.9 | 22.8 | 90,060 | | Management analysts | 13-1111 | 718.7 | 852.5 | 133.8 | 18.6 | 78,600 | | Sales representatives, wholesale and manufacturing, except technical and scientific products | 41-4012 | 1,480.7 | 1,612.8 | 132.0 | 8.9 | 54,230 |
ResultsOf the projected 15,628,000 jobs that will be filled by 2022, only 2,731,000 of the jobs in the first table should require a college degree. However, given the emphasis on getting a degree (and brutally overpaying for it), and given the sheer number of people with degrees who are jobless, many employers will only hire those with degrees simply because they have ability to be picky. There is another gotcha for the unemployed. Other employers do not want overqualified applicants fearing they will leave at the first opportunity. Thus, applicants need to correctly figure out whether to dumb-down or trump-up their resume to improve their own chances, even though overall chances for higher paying jobs is poor. Those who don't make good use of their college degree will be stuck competing for low-wage jobs as personal care aids, retail sales clerks, food prep workers, and as various assistants. Education for Education's Sake My friend "BC" explains ... In effect, the US is "educating"/socializing a large share of our young people coming of age to be hopelessly indebted and unemployed or unemployable.
With record debt to wages and GDP, withering costs of "health care", and fully mature and costly urban/suburban/penturban infrastructure build out and associated high fixed costs, a growing majority of millennials simply cannot afford to begin or sustain the urban/suburban, auto-, oil-, and debt-based lives as "consumer units".
And neither will a majority of Boomers be able to sustain their lifestyles into late life. The situation is made worse in that the US economy has not created a net new full-time private sector job per capita in 30-35 years.
Automation of services sector employment now occurring at an accelerating rate will exacerbate conditions for paid employment and purchasing power, especially for women who make up a disproportionately larger share of employment in medical services (80-85%), "education" (80%), gov't (60%), and financial services (60%).
Consequently, women face loss of paid employment as a share of the work force and population on a scale that men have experienced in the goods-producing sector since the 1970s-80s.
The relative payoff to a bachelor's degree peaked in the 1990s and will continue to decline hereafter for the rest of millennials' lifetimes, especially those in the bottom 90% of households who cannot actually afford a post-secondary credential.
Many argue that the jobs lost in the aforementioned sectors will be replaced by even better jobs in the helping, human touch, and other occupations that we cannot predict; but this presupposes, incorrectly in my view, that the loss of tens of millions of jobs will allow an economy that still produces sufficient level and growth of after-tax, real purchasing power, discretionary income, and tax receipts to support what are more often than not public sector or costly private sector services for the top 1-10% . Education Model BrokenThe US education model is fatally broken because the cost of education is far too high. Soaring student debt with no way to pay it back is one consequence. In turn, high student debt guarantees low family formation rates with kids moving back in with their parents. Here is a shocking chart that shows what I mean.  The above chart was part of my Wine Country Conference II presentation, which will be out shortly. Note that approximately 12% of women and 17% of men aged 25-34 now live with their parents. The implications on household formation, child raising, and home buying are obvious. Mike "Mish" Shedlock http://globaleconomicanalysis.blogspot.com |
