The Millennials
Growing generation
This generation will make up the majority of workforces in the years to come.
By 2025, Millennials will comprise three-quarters of the global workforce (EY, 2015).
Growing skills mismatch
As there are more job seekers than available job vacancies, this generation will be the most educated but also the most under-utilised or under-employed.
The problem of under-employment will worsen as more young people are forced into universities to learn skills that employers don’t need but require as pre-requisites for applying for jobs.
The skills mismatch between what the job seekers have and what the employers demand will grow much more. This is going to be a major problem for this generation.
When there are no job vacancies available upon graduation, many will continue studying their Masters or other post-graduate programs. In doing so, they will continue to accumulate more study loan debts.
Without money, Millennials cannot reskill to meet the requirements of employers.
Without jobs, they will have no means to pay off any of their study debts, even until retirement. When interest is factored in, many people will be financially worse off.
It is interesting to note that Millennials will have the most study loan debts to pay, while Generation X has mortgages to pay down.
Many will be forced to take on jobs that they did not study for just to get by financially. A career change will become the norm for this generation. Freelancing and the gig economy will look more promising for Millennials.
Changing job markets
The nature of the job market is ever-changing.
There are less full-time jobs and more part-time and freelancing jobs.
The flexibility of hiring is the name of the game.
Companies are trying to cut cost. They are hiring temporary workers or contractors as a way to manage or reduce cost. It is also a way to avoid increasing regulatory compliance associated with hiring permanent employees.
Because of under-employment, many Millennials may be forced to freelance and earn some money for themselves. Voluntarily or involuntarily, this generation will freelance more rather than become employees.
With platforms like Uber and Freelancer, the pricing mechanism is transparent. This can really suppress prices for customers (which is good) and net incomes for the freelancer (which is bad).
As such, Millennials may be earning a much lower per-hour rate than ever before because of lower incomes generated through these freelancing marketplaces.
They will also become entrepreneurs, trying to solve the social problems that they see around them.
Millennials are financially bankrupt!
According to a 2018 Federal Reserve study, “Millennials are less well off than members of earlier generations when they were young, with lower earnings, fewer assets, and less wealth. For debt, millennials hold levels similar to those of Generation X and more than those of the baby boomers.” They also “tend to have lower income than members of earlier generations at comparable ages”.
A 2017 U.S. Census data showed that “more young men are falling to the bottom of the income ladder. In 1975, only 25% of men, aged 25 to 34, had incomes of less than $30,000 per year. By 2016, that share rose to 41% of young men. (Incomes for both years are in 2015 dollars.)”
While Millennials may be better educated, they have a very high debt to income ratio. The emphasis on education underlies the rising study loan debt that many young people carry.
In 2013, 41% of young families had study loan debt, up from 17% in 1989. Not only do more young families have study loan debt, but they are also deeper in debt too. The amount owed on student loans nearly tripled, rising from a median of $6,000 to $17,300 across the same period (in 2013 dollars).
Research showed that 36% of Millennials said they had study loan debt for their own education, and 19% of Gen Xers said they were still paying off their own student loans, and only 4% of Boomers are still owed money for their educational loans.
Changing financial profile
With less money in real terms, Millennials will struggle to save for their future especially with a study loan debt to pay off at the same time.
Forget about borrowing money to buy their homes. They will try to stay with their parents for as long as possible. They may also ask for money from their parents to contribute to the down payment for their house.
When study loans are not paid off in a timely manner, this will certainly impact their credit profile and scores. Debts are recorded against their name. Personal credit ratings can be ruined by unpaid or outstanding debts.
Lower or stagnant wage growth, increasing under-employment, decreasing full-time employment opportunities, worsening housing affordability, and rising household and government debts are all financial challenges impacting Millennials for many years to come.
In fact, these challenges will get worse as governments are slow to implement policies to mitigate these negative impacts.
Increasing stress levels
The 18th Annual Transamerica Retirement Survey showed that three quarters (76%) of surveyed workers believe they’ll have a harder time in retirement than their parents, and 76% are concerned about the status of Social Security.
Time (2018) reported that average stress levels for Millennials were the highest overall, at 5.7, compared with Gen X’s 5.1, and Boomer’s 4.1.
Millennials reported the highest rates of depression. Approximately 1 in 5 millennials who sought out employee assistance or work-life advice from Bensinger, DuPont & Associates (BDA). In contrast, 16% of baby boomers and 16% Gen Xers reported depression.
The higher stress level can impact their work and performance.
In summary
The future of work for Millennials will come with so many challenges.
More and more will be over-qualified, under-employed, laden with study loan debt, suffer mental illness, and working on short-term jobs.
For those who are fortunate to secure full-time employment, they can earn a high income. But for those who are struggling with employment, they will have to depend on their parents a lot more because their incomes are low.
Skills mismatch will become a significant problem for Millennials. When there are more job seekers than job vacancies, this is another problem for them to navigate.