Right now, millennials represent the largest single consumer group in the United States: they number 83.1 million and they represent a full quarter of the US population. When it comes to corporations targeting consumers, millennials are at the top of the list for those obvious reasons, according to a new article by Adweek. But now, generational expert Alexis Abramson, who has 25 years experience in the field, is claiming that corporations aren’t getting the ROI that they anticipated from millennials.
“There was a great deal of interest [in millennials], but there wasn’t as much due diligence around that group,” she said. “We’ve generalized them as a certain type of person, [but] the reality is the rubber is meeting the road. Companies are starting to understand, ‘Wow, we’re not getting the ROI we thought we might’.”
Her analysis is part of a growing group of evidence that suggests that millennials haven’t been the consumer boon that many corporations expected them to be. Their appeal remains that they are digitally native, mobile oriented, media savvy, politically progressive and well educated. But there’s just one problem: almost none of them seem to have the inly asset corporations care about: disposable cash.
This is one of the top takeaways of a brand new study from Deloitte’s Center for Consumer Insight, which surveyed over 4,000 American consumers to determine their current consuming habits. The survey found that since 1996, the average net worth of consumers under 35 has dropped by an astonishing 35%.
Kasey Lobaugh, Deloitte’s chief innovation officer for retail and distribution was extremely surprised by the data, especially given that companies have been busy focusing on millennial spending habits.
“[If] you think about the narrative in the marketplace around the changing consumer and the millennial, there’s very little focus on the behaviors that are driven by economics. There’s a narrative driven by some kind of cultural change. One of the things that really shocked me is that the economics of the consumer are really the most singular driver of behavior.”
Millennials have been generalized and targeted because of statements like this one, from the Obama White House in 2014: “Millennials are a technologically connected, diverse and tolerant generation. The priority that millennials place on creativity and innovation augurs well for future economic growth, while their unprecedented enthusiasm for technology has the potential to bring change to traditional economic institutions as well as the labor market.”
But now that millennials have been part of the labor market for over a decade, the sad reality of their buying power has hit potential sellers like a ton of bricks. Spending, per se, isn’t the issue: Millennials spend about $600 billion a year and are on track to spend $1.4 trillion by 2020, according to Accenture data. The problem is that they are saddled with large and unavoidable expenses that reduce their overall purchasing power. These expenses primarily include housing and student debt.
The home ownership rate for Americans aged 25-34 was 37% — 8% below the rates for Gen Xers and baby boomers, according to the Urban Institute, in 2015. Ron Cohen, VP of product strategy for consumer analysis firm Claritas said: “Of the 13.5% of millennials that are heads of households, only around 50% of them own their own homes. The other half are renters—many likely with roommates to share rent and other expenses.”
Lobaugh said: “We have seen a drop in home ownership. It’s not that the millennial somehow doesn’t want to own assets. But what we lose sight of [is] the bifurcating economy. After the downturn [of 2008], it became harder to get a loan. The population that couldn’t get access? They’re renting now.”
And income inequality remains a major issue.
Author and consultant Dan Schwabel said: “One big issue in our world right now is income inequality, and I think you’re seeing that way more in the younger generation. Largely because of the 2008 recession, millennials had a delayed adulthood, and as a result, they’re making adult decisions later in life.”
He continued: “Millennial consumers want the same things as the older generation, except they have to make short-term financial decisions to have a chance of having that kind of life. And it will take them longer. Not only are they getting paid less, but the big elephant in the room is they have $1.53 trillion in student-loan debt.”
Debt, indeed, is the biggest problem facing millennials, despite them being the most educated generation in history:
According to research performed by the George Washington University School of Business, 66% of millennials have more than one type of long-term debt, and nearly half (48%) say they live paycheck to paycheck.
According to Pew research figures, 36% of millennial women and 29% of millennial men have a bachelor’s degree. (For Gen X, those numbers are 28% and 24%, respectively, and for boomers, it’s 20% and 22%.)
Lobaugh continued: “Between 2004 and 2017, student debt rose 160%. Think about that. People are more educated, but we have stagnant wages. The ROI on education isn’t materializing the way they might have hoped.”
Considering the forces at work, blogger Mike Shedlock can’t help but refer to millennials as: “The screwed generation—that was the term I came up with. I believe they are.”
You can read Adweek’s full report here.
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Millennials are “Progressive”. Sure they are, for now. But people mature, they experience life, they get whacked in the face with life’s 2X4’s. Then they stop being “Progressive” and turn into real adults.
Apparently they can’t read maps, operate manual can openers, cook, sew, tell time on a non-digital clock , drive, operate or understand a checkbook and yet, now, corporations weren’t aware of their deficits? Millenials have been coddled and abused with neglect. They are the day care generation and their parents spoiled them and never taught them any life skills. Blame the parents for their children.
Yep, day care generation. My 23 year old daughter has a daughter and is pregnant with a son. It looks as though she will be a stay at home mother. Fingers crossed. Praise be Lord Jesus.
A degree from some black college is not an education. People with STEM degrees have educations and most have jobs. Youth since the Vietnam War have had no draft and that is a huge advantage
Exactly! The “most educated generation” comment needs to be qualified. Most are very poorly educated, regardless of some Bachelor’s degree.
Our generations ( you boomers and us Gen X’ers) focused on career training after high school. Whether it was college with a specific career in mind or a trade school for a skilled labor job, we did not go to college for a “degree.” We went for education not to waste 4 years and $100k on some “studies” program.
PS: When I was young and truly paycheck to paycheck– my necessities did not include $100 cable bills, $15 a month for Netflix, designer clothes, $500 phones and/or $50 phone bills per month…all of which these soft millenials must have. They are the “instant gratification” generation–no sympathy here.
Millennials are poor, median net worth virtually nothing…How did the corporate world not know that?
This article is a joke. What do they have degrees IN? Gender studies? Philosophy? And tolerant? Are you joking? From my fortunately limited dealings with millennials they are the incredibly bigoted and narrow minded. They are the best educated generation of idiots America has ever seen. https://www.dailymail.co.uk/sciencetech/article-4338132/Milennials-don-t-know-change-light-bulb.html
People under the age of 40 with no health insurance provided by their employer (180 million) do not know if they make over 45,000 dollars they will pay $1,500 dollars a month for health insurance.
The prospect of saving will hit home when their net worth moves north of a few hundred thousand.
Nobody twisted arms to make these kids go to college and accept the money they have to repay. Everything is crazy priced compared to wages. That’s life. I’m not saying its good.
It’s not just student loans, though Al Capone would have been envious of that scheme.
Corporations maximize profits by underpaying employees/bring in foreign workers.
Politicians buy votes by promising free stuff , paid for by higher taxes.
Is anyone surprised that there is a shortage of spending money?
Wow. Let’s bring in more illegals and foreign visa workers.
a go-getter could probably make a killing selling them renters insurance.
Working full time as an apprentice at 18 and selling my first house I bought at 24 and purchasing a new home at 26 I know exactly why the millennials are in the financial fix as a total group they are in !
The real living wage with real incomes and lucrative benefits are gone and they are not coming back ! Certainly many well educated young people are finding good salaries and benefits in government and health care but that is only a small segment . With 104 MILLON people unemployed or underemployed and 80 plus MILLON millennials competing for the few we’ll paying jobs there is no there “there”!
This the tax base is screwed as is everything government attempts to do with debt .
You want to save a city like Baltimore , Chicago or Detroit you need at least 250,000 industry jobs paying high wages plus medical and retirement benefits for each city and that’s just a start .
It may not be near enough !
These kids witnessed their parents and grandparents lose pensions and benefits as they got buried by student loans with pie in the Sky promised by those in education administration profited from their indebtedness !
It’s a win win thanks to the IRS being the final collection agency for much of college debt !
These kids see the scam know they have been screwed and many choose not to play !
Can you really blame them ?