I recently gave a presentation on different generations to a group of CEOs. Afterward, one of the older and wealthier CEOs told me this: “Behind every overpaid Millennial is a Baby Boomer executive who doesn’t know how to use his computer. Millennials would be nowhere without the wealth Boomers created.” While I know that is a common sentiment among Baby Boomers, it could not be more WRONG!
Baby Boomers are indeed wealthier than any generation, before or since, per capita, at any age. Boomers created the consumer society by generating wealth and spending it on themselves: bigger houses, multiple houses, multiple cars, etc.
Millennials went a different way. They created what is called the sharing economy, the gig economy or the on-demand economy, which is exemplified by businesses like Uber, Airbnb, Car2Go, TaskRabbit, Zaarly, DogVacay, Turo, Fon, WeWork and Lending Club. Millennials are creating a cultural shift in our society when it comes to spending money. Baby Boomers spend money on things; Millennials spend money on shared experiences. A survey by the Harris Group found that 78 percent of Millennials prefer to spend their money on experiences rather than things.
Millennials Play with FIRE
Millennials are also much more fiscally conservative than previous generations. In a national survey, Millennials were found to be more fiscally responsible when compared with Boomers and Gen Xers.
We can see this in the trends they propel. Rather than saddling themselves with huge mortgages, some Millennials choose tiny houses or micro-apartments. Millennials are also turning away from Americans’ longtime love of automobiles. For previous generations, a sign of financial success was buying your first Mercedes, BMW, Lexus or other luxury vehicle. But cars are depreciating assets that sit idle 95 percent of the time. And, if you live in an urban area, you have to pay to park. Some Millennials are finding the expense of a car just isn’t worth it. (One study found that 58% of Millennials without cars said they don’t need one, and 42 percent don’t have one due to financial reasons). Often, they choose to live in urban areas so they can walk or use ride shares. If they have a car, it is usually an older model that they did not buy at a premium.
Another trend among some Millennials is the FIRE movement. FIRE stands for “Financial Independence – Retire Early.” The historical career arc in the United States has been to work until you are 65 and then retire. FIRE followers are turning this belief on its head by saving aggressively and spending frugally so that they can live on their own terms decades before previous generations were able to do so. Some who practice FIRE try to save as much as 75 percent of their income.
If you would like to read more about FIRE, the Wall Street Journal published an article on the movement, its participants and the sacrifices they are willing to make in the name of self-determination.
What This Means For Workplace Cultures
Part of the challenge for Baby Boomers who are running organizations is to understand this cultural shift. Historically, Baby Boomers would tolerate bad bosses and bad workplace cultures for a higher salary. Millennials will not. The war for talent that is being experienced across the country is occurring in those companies that have not yet learned this. If you want to win the war for talent, you must take money off the table (pay all employees fairly) and build an outstanding workplace culture.
Our culture is changing. In the words of Thomas Paine, “Lead, follow, or get out of the way.”
If you have any questions or would like to discuss this topic further, just drop me a note.
Keep cultivating your culture!