Millennials’ Empty Wallets

Their purchasing power has decreased by 35%. In America, seemingly an oasis of full employment, salaries no longer increase as much as they did in the past, while some indispensable expenditures have become huge burdens.

As the postwar baby boom generation prepared to exit the job market or had already retired, sociologists and the marketing world turned their attention to millennials: the generation destined to reshape society (with respect to tastes, lifestyle, consumer behavior) in many countries, especially in America. However, the reality is that millennials (those born in the 80s and early 90s) have been unable to achieve financial independence from their parents (the baby boomers) and already have the next group breathing down their necks, i.e., the 20-year-olds of Generation Z, the first generation completely immersed in digital culture. Having witnessed their parents’ struggle with financial troubles due to 2008’s Great Recession, Generation Z has grown disenchanted and pragmatic, which is in contrast with a certain idealism that characterizes millennials, at least in the United States. Now, some studies by consulting firms and the Federal Reserve show this social group as a sort of “lost generation,” at least from a business perspective. In America, there are by now 83 million millennials (citizens between 23 and 38 years old) who make up a quarter of the population. It is the largest social group, which is also expected to be the most dynamic, and the one with the highest spending capacity.

Well, millennials do spend money: $600 billion a year, an amount expected to increase to $1.4 billion in 2023, according to Accenture’s analysis. Nevertheless, a poll by Deloitte warns that millennials’ purchasing power has decreased by 35%. In America, seemingly an oasis of full employment, salaries no longer increase as much as they did in the past, while some indispensable expenditures have become huge burdens. Businesses have been wondering why a social group that claimed it wanted to consume “experiences” rather than material goods is instead spending less on shows, culture and travel. The reason, as explained by the Fed, is that 88% of millennials live in urban areas and do not have the funds to buy a home, spend much more on rent, face increasing health care costs and, most importantly, are shouldering student loan debt amounting to $1.5 trillion. It is the most educated generation in history (36% of women and 29% of men hold an academic degree), but at a high price. Due to the trouble finding a job that pays well and knowing that they will have to repay student loans as massive as a home loan for 10 or 20 years, millennials are forced to give up many things. There is some money left for a smartphone and little else.