Even though Lambert and I dislike the use of marketer-created generational cohorts like Gen Y and Gen X, because age groups do not have political agency and the range of experiences within a group will be greater than across groups, a survey of 1200 Millennials by Ernst & Young and Economic Innovation Group shows how precarious their economic condition is. Admittedly, that is a long-standing feature of young adult life that is seldom discussed in polite, as in posturing-as-successful company. I recall two successful professionals in their 40s recounting how they lived paycheck to paycheck, on pasta, in their early-post college years, fearful that a personal emergency would leave them destitute (neither had relatives in the wings to bail them out; one was from a desperately poor family whose escape depended in part from someone making sure she got elocution lessons so as to eradicate her class markers; the other was estranged from his family by virtue of having come out). But for most college educated young adults in the post-World-War-II era, prior to the crisis, lean years in their 20s were a transition period, not a permanent status.
By contrast, this study shows that quiet desperation is a state of life for most Millennials. While the shock of the financial crisis did enormous damage to many people in all age groups, as anyone who lost their home to foreclosure will attest, Millennials faced a job market that left even normally-always employable new college grads out of work or employed at well below their potential as baristas, temps, or in low-level retail jobs. This has a huge impact on their lifetime earnings, not only by depressing income in their early years, but even when they find better-paid work, even then putting them on a lower income track than those that landed higher-quality roles straight out of school.
Read this short but important survey in full; it gives a grim picture. I’ve highlighted a few findings below (emphasis original).
Coming of age during a historic economic downturn has severely impacted Millennial life
- 30 percent of respondents live with their parents, which rises to 40 percent for single respondents.
- Nearly one-third believe their local community is still in a recession.
Stress levels run high for Millennials
- 78 percent of Millennials are worried about having good-paying job opportunities.
- 74 percent are worried they won’t be able to pay their healthcare bills if they get sick.
- 79 percent are worried they will not have enough money to live on when they retire.
- Only 6 percent of Millennials feel they are making a lot more than required to cover basic needs. For Millennial women, the figure is only 3 percent.
- 63 percent would have difficulty covering an unexpected $500 expense.
- 44 percent would dedicate $5,000 in lottery winnings to paying off bills and loans, signaling a struggle to launch, save, and invest.
One of the things I found sad is the degree to which Millennials have bought into societal hype about entrepreneurship. Historically, the most common trait of an entrepreneur was that he’d been fired twice.
The idolization of entreprenuership has bolstered the bogus idea that it’s a reasonable employment option for many people. I’ve heard far too many adults who’ve spent their lives on a paycheck argue that people who’ve lost their jobs should go out and create their own work.
As someone who has been in business for myself for 27 years, I can tell you that anyone who has a decent gig and can manage corporate politics should seriously question the idea of going out on their own. Independence comes at a very high price. Having a company take care of the large amount of grunt work in running a business, as well as considerably buffering your downside risk (like draining your savings and retirement accounts to keep a listing business going, as I’ve seen way too many people do), is worth a lot. As a colleague put it, “The difference between being self employed and unemployed is fine indeed.”
The myth that lot of people can sally forth and start a venture that will provide them a decent living serves as a convenient excuse for the failure to create enough jobs. Very few people have the temperament and mix of skills and experience (and luck) to make a go on their own. 90% of all new businesses fail within three years. And it’s also hard to make partnerships work.
Yet Millennials romanticize entreprenuers as successes when the data consistently shows that most fail:
Few Millennials may be starting businesses of their own, but the generation deeply admires entrepreneurs
- Millennials overwhelmingly (78 percent) consider entrepreneurs successful
- 62 percent of Millennials have considered starting their own business.
- 55 percent believe their generation is more entrepreneurial than past ones, even if the data say otherwise.
The biggest obstacle keeping Millennials from starting their own business is money
- 42 percent of Millennials lament that they don’t have the financial means to start a business.
- Across demographics, white men are least concerned with finance, with only 40 percent citing it as the biggest obstacle compared to 53 percent for black women and 59 percent for Hispanic women.
While it may seem rational for Millennials, faced with a crappy job market and short job tenures, to try to pull themselves by their bootstraps, they much less likely to succeed than others who launch new ventures.
The most common characteristic of successful entrepreneurs, per extensive research by Professor Amar Bhide in his classic book, The Origin and Evolution of New Businesses, is that via their experience working for others, they’d identified a niche that was underserved and started a business to fill the gap. Young people with no or little business experience are unlikely to have the opportunity, on someone else’s nickel, to get a sense of how an industry works and identify opportunities. Nor will they have had much opportunity to learn other skills, like negotiating, qualifying suppliers, vetting and hiring professional services providers, and managing subordinates.
Nevertheless, despite the considerable distress of many Millennials, many are still hopeful about the longer term. While people have a remarkable capacity to endure, one has to wonder how long Millennials will remain acquiescent if most of them continue to languish economically while the top 10% and higher income strata continue to accumulate more income and wealth at the expense of the rest of us.