From Home Furnishing Business
Millennials: The Changing Face of Young Adults in the Furniture Industry
Millennials, Americans born roughly between 1982 and 2000, account for more than one quarter of the nation’s population. As of 2015, these 17 to 34 year olds numbered 83.1 million and have surpassed the 75.4 million Baby Boomers. The Millennial generation continues to grow as young immigrants move into the U.S., while deaths among Baby Boomers exceed the number of older immigrants. These children of the Boomers will emerge into full adulthood in 2017 as the largest consumer generation in history.
This is the first of two articles profiling this generation. The initial article explores demographically how the Millennials have altered the population, income, education and household characteristics of both the Under 25 and 25 to 34 age groups over a ten-year period. The article next month will explore how researchers think this generation will spend its estimated $200 billion dollars annually starting next year.
As a whole, the number of 15 to 34 year olds has grown 9.5 percent from 2004 to 2014 (most recent population data). As shown in Table A, the glut of Millennials is in the 20 to 24 age group – totaling 22.9 million in 2014 after jumping 12.6 percent in ten years. Ages 25 to 29 have also grown dramatically, increasing 15.7 percent from 19 million to 22 million. While dipping down to 19 million in 2008, age group 30 to 34 has climbed up to 21.5 million. The Millennial stragglers are in the top end of the 15 to 19 age group. Once the highest young adult population in 2006 and 2007, most have since aged into their twenties leaving this age group relatively flat at a 3.7 percent growth over the ten-year period.
Income and Employment
The economy has had a major impact on Millennials. Many of them still live with their parents, have crushing student loan debt and are underemployed at best and unemployed at worst. Over the past ten years individual incomes have yet to reach pre-recession levels. Latest median income figures from the Census Bureau report Millennials ages 25 to 34 earn $31,219 annually, down over 10 percent from a peak of $34,459 in 2007. Many of the Under 25 age group Millennials are currently part-time employed college students, underemployed graduates or workers in unskilled low paying jobs.
The percentage of Millennials that are college educated is higher than any generation preceding it, a fact that should bode well for future economic growth. Over seventy percent of Millennials have some higher education (Table C) a much higher percentage than their Boomer parents.
Despite the level of education, a staggering number of Millennials are still looking for work. At the end of last year, 9.4 percent of adults ages 20 to 24 seeking jobs were still unemployed (Table D).
Of all of the characteristics of Millennials, perhaps none is more significant to the home furnishings industry than the tendency to delay marriage (Table E). In less than ten years, the marriage rate shifted from 38 percent of adults marrying by age 34 to only 26.8 percent. Marriage spurs home ownership and family planning which in turn feeds the home furnishings industry.
Although Millennials make up the largest and most educated generation in American history, the combination of economic factors, delayed marriage and family formations and shifting consumer attitudes also make them the slowest to embrace home ownership. This is most evident in the 25 to 34 age group where home ownership has fallen 10 percentage points in 10 years. In 2004, 49 percent of Millennials owned their own homes compared to 39 percent in 2014. (Table F).
The glut of the Millennials, the Under 25 age group, is one of the few groups to increase expenditures on furniture in the last 10 years, although expenditures still comprise only about 5 percent of industry sales. Many of these Millennials, however, still rely heavily on family financial support. Millennials ages 25 to 34 as well as the older GenX 35 to 44 group, traditionally the core of the furniture industry, have both failed to reach pre-recession furniture expenditures – down 8.2 percent and 12.3 percent.
For the home furnishings industry, the Millennials always seem to be just over the horizon but yet to make their big entrance. In terms of furniture industry sales, sales to the Baby Boomers are still growing, but they will begin to lessen their impact and make way for the Millennials.
Many things add up to help explain the slow arrival of the Millennials on the home furnishings consumer scene. The long recovery from the recession brought stagnant wages and higher unemployment. Add to that the delaying of marriage and slow home purchases. But the industry is ready. In the next issue, Statistically Speaking will examine the attitudes and lifestyle characteristics of Millennials and whether home furnishings purchases will become as important to them as they have been to their Boomer parents.