THE INSTANT GENERATION CAN PLAN FOR A LASTING FUTURE
By Dr. Peter R. Andersen, Anderson Economic Research Inc.
Millennials face a bright future, even though they may not see it.The malaise facing young people today cannot be attributed to age alone. The decade you are born in matters a great deal; the political climate, economy, societal values and global trends of the time significantly influence your opportunities, schooling, family life and career. Children born in the 1890s or the 1920s were unlucky; they faced the devastation of WW1 and WW2. In contrast, the 1930s and 1940s were opportune times to be born; the low birth rates during those years created little competition for university and jobs when those babies came of age during the economic boom years of the 1950s and 1960s.
The current Millennial generation is facing its own set of historical forces. Income security and careers with longevity seem hard to find in this replaceable and global job market. The Canadian youth labour market shows elevated rates of unemployment compared to prior to the Great Recession and in relation to older Canadians. Older Millennials who were able to start their careers before the 2008-2009 recession may be less affected by these trends, but the entire cohort has been negatively impacted by its aftermath. Millennials are also frustrated that the skills and knowledge they spent years acquiring (in addition to student debt) are not being utilized: among 16-35 year olds, there is a pronounced mismatch between those with medium to high literacy rates who have jobs that engage only medium-low literacy skills. And traditional work no longer offers the benefits and incentives that it once did in earlier decades. The average annual income is the lowest of the last three generations, while the cost of housing—particularly in North American tech-hub cities (San Francisco, Silicon Valley, New York, Seattle, Toronto and Vancouver)—is at an all-time high. Job openings in these prohibitively expensive cities repeatedly go unfilled.
Companies are finding it challenging to find young candidates willing to do the work and to retain them long enough to become leaders, while Millennials are out there—desperate for career development and salaries they can use to pay off debts and raise their own budding families on. Millennials living in urban areas—as most do—simply cannot afford to accept entry-level or low paying positions, and they know they are qualified for more.
Fortunately, Millennials have an expertise that will be the key to their long-term career success. They were born into the digital era and at the cusp of a new technology cycle—starting with the information and telecommunications revolution in the early 1980s when IBM introduced its first PC. And much like the Commodore 64, the Macintosh and Dell’s Turbo PC that followed suit, Millennials grew up capitalizing on technological advancements as they approached adulthood by Y2K. The productivity tools (Microsoft), access to information (Google), social networking (Facebook) and mobile computing (smartphones) that came out of the subsequent years fundamentally changed the Millennial relationship with technology like no other peer group in history. Their digital skills give them a clear advantage over the previous analog generations.
The current technology driven economic cycle is still young. Cloud computing was not introduced until 2006 and it took several years for other providers to realize the power of what Amazon Web Services (AWS) had developed. The cloud is now making a huge contribution, enabling and accelerating the start-up of new companies. While the IT application and infrastructure cycle was interrupted by the financial crisis, it is now speeding up. It will be recharged in 2017 by a rebound in the U.S. economy that should last through the rest of this decade.
The well-paying jobs that require technical expertise will be found in this sector, perfectly suited for Millennials’ skillsets and aspirations. The reduced quality of traditional full-time work opportunities is pressuring Millennials to be entrepreneurial and their efforts will fit well with nascent tech companies who require a business culture with an innovative spirit and freedom from conventional thinking and administrative bureaucracy. Millennials are ready to answer the call. They are frustrated by an analog business culture and decision making process that moves slowly; they have grown up used to quick answers and quick results. As long as they can develop their soft skills to be persuasive in the business environment—and are able to influence colleagues and sell their ideas—their efficient digital approach, creativity, passion and communal influence should lead to business success.
Their high student debt will also pay off in time. The 2013 National Graduates Survey demonstrated that median estimated earnings increase with each level of post-secondary educational completed. Most graduates of post-secondary institutions are having success finding employment in both good economic climates and bad, with almost 80% of employed graduates reporting a ‘close’ or ‘somewhat’ close relationship between their education and job 3 years after graduation. Education is still a worthwhile investment for this generation.
Fortunately, the next recession is nowhere in sight. The business cycle is not yet in its late stages. Fears of an extended period of secular stagnation in the U.S. are unfounded. In fact, the underlying economic fundamentals—strong household balance sheets, manageable business sector leverage, highly capitalized and liquid banks, backlogs of consumer and housing demand—all point to the onset of an extended period of solid economic growth in the United States. In time, this will inevitably spill over into Canada. Millennials already have the skills and education for success. The positive economic climate on the horizon will give them the opportunities they need to fully realize their dreams.