Millennials are pretty much like every other generation.
It turns out millennials aren’t fundamentally different from other humans.
The tendency of business leaders, analysts and reporters to treat today’s 20- and 30-somethings like a completely new breed of young person is misguided, according to a new analyst report from Forrester Research, a marketing and strategy firm. Millennials’ habits may be influenced in part by major technological innovations, like smartphones, but that doesn’t make them any different from earlier generations of young people or even today’s 40- and 60-somethings.
The real reason young people’s spending habits differ from those of their parents is simple, says Sucharita Mulpuru, a retail analyst at Forrester and the author of the report: They have less money. Americans under 25 have seen steep declines in income — in 2013, this group had just 82% of the purchasing power they had in 1973, according to Forrester. They’re also weighed down by student debt; education expenses accounted for 7% of total spending for 2013’s under-25 household, which is up from 1% in 1973, the report notes.
“That’s the macro-fact” about millennials, says Mulpuru, “not the fact that they’re on their iPhone.”
Today’s 20-somethings are not the first to experience “disruptive” technology as they come of age, Forrester notes. Mid-century youth watched color television, used copy machines and saw credit cards become popular for the first time. Young adults in the 1990s witnessed the mass marketing of CDs, DVDs, digital music and the explosion of email, as well financial innovations like online stock trading and banking. It’s the myth that millennials and the technology they’ve adopted are fundamentally different than that of previous generations that pushed Mulpuru to dig into the data.
“Probably like a lot of people I was just sick of hearing that Instagram is going to change the world,” said Mulpuru, who considers herself part of Generation X. “We have to compare apples to apples. Let’s compare young people today to young people 40 years ago.”
It’s true that compared with their parents and grandparents, today’s young adults are delaying major milestones, like first jobs, getting married and having kids, as well as some of the big purchases that go with them, such as houses and cars. But if history is any indication, millennials will dig themselves out of that financial rut. Just 14% of under-25 households in 2010 owned a home, but by 2013, households led by people between the ages 25 and 34 owned homes at a rate of about 40%, according to Forrester.
“There’s no question that they’ll be okay, but they’re in the nest for longer,” Mulpuru said.