Are millennials really ruining consumerism?
Celeste Tooley browses footwear with Gabe Johnson, both of Provo, at a retail store during Black Friday shopping Friday, Nov. 23, 2018, at University Place in Orem. Isaac Hale, Daily Herald
Whitney Bair, of Mona, holds bags of different from different retailers as she browses products in another retail store during Black Friday shopping Friday, Nov. 23, 2018, at University Place in Orem. Isaac Hale, Daily Herald
There is much discussion about millennials and their spending habits — and many blame millennials for the changing face of consumerism.
We’ve all heard the opinions: millennials don’t want single-family homes, they only purchase the latest tech, etc. But a new Washington, D.C. study found that millennials have similar spending interests compared to Generation X and Baby Boomers during the same age range. It also points to socio-economic factors for millennials’ spending choices.
The study, ”Are Millennials Different?” by Christopher Kurz, Geng Li and Daniel J. Vine, found that overall, when controlling for age, income, family status, race and other social factors, millennials consumerism is similar to earlier generations.
As the authors point out, their results “suggest that millennials do not have less of a taste for consumption than members of earlier generations.”
Unfortunately, when looking at millennials’ income, there are substantial differences compared to earlier generations. Surprisingly, millennials appear to have similar challenges to those of the Greatest Generation — namely those who grew up during the Great Depression.
Adhering to Pew Research Center definitions, millennials are those born between 1981 and 1997, Generation X are those born between 1965 and 1980, Baby Boomers are those born between 1946 and 1964, the Silent Generation are those born between 1928 and 1945, and the Greatest Generation are those born between 1915 and 1928.
The study presents snapshot comparisons of individual and married couple income for the years of 1978, 1998 and 2014 — timing the comparisons to when Gen X and Baby Boomers were a similar age to millennials. According to the study, these years were also chosen because each was during “an expansion phase of the business cycle.”
According to the comparison, while the overall average full-time labor earnings for males increased 10 percent between 1978 and 2014, “younger male workers appear to have been left out of the labor earnings increase.” Compared to a male household head in 1978, male household millennial heads earned 10 percent less. While overall income rose for all females since 1978, millennial female household heads earn about 3 percent lower than comparable Gen Xers from 1998.
Compared to previous generations, the study shows that millennials spend about the same as prior generations at the same age when it comes to entertainment and alcoholic beverages. Millennials appear to spend less than previous generations on apparel, tobacco, personal care items and reading materials.
But data in the study showed that millennials spend more for housing and health care costs than those of previous generations. The study’s authors attribute this to the faster rate of increase for housing and health care prices than for other goods and services. According to the study, only 33.9 of young millennial households were homeowners in 2016, compared to 50.2 percent of Gen Xers at the same age in 2001, and 47.5 percent of young Baby Boomers in 1989.
The study posits that some of the millennials spending habits can also be attributed to their coming of age during the Great Recession, when the labor force was weakened and credit was tight.
“The effects of these unfavorable conditions on labor force attachment and attitudes towards saving and spending may have been more permanent for millennials than for members of generations that were more established in their career and lives at that time,” the authors explained.
The data bears this out, as millennials are saving more for retirement — more than both Gen Xers and Baby Boomers were at the same age.
“In the economic sphere, millennials appear to have paid a price for coming of age during the Great Recession,” the authors conclude. “(M)illennials do have lower real incomes than members of earlier generations when they were at similar ages, and millennials also appear to have accumulated fewer assets.”
Thus, the study points to the idea that millennials appear to have similar appetites for consumption of goods and services as their generational counterparts at similar ages — they just don’t have quite the income for it.