Search Twitter Facebook Digital HFBusiness Magazine Pinterest Google

Get the latest industry scoop


Monthly Issue

From Home Furnishing Business

Statistically Speaking: The 10-Year Millennial Economic Slump

This year the youngest Millennials will officially become adults, according to the Census Bureau’s definition of the largest generation since the Baby Boomers.  Born 1982 to 2000 they will turn 18 to 36 years of age by the end of this year.  Note that Pew Research, an often-quoted research organization when it comes to Millennials, has now set what it believes to be the Millennial generation as born between 1981 and 1994. But for purposes of this article, the official Census Bureau definition will be used.

Numerous contradictory studies have attempted to profile this very diverse generation. Some data identifies them as big spenders adding to their debt with lifestyle products and so-called life experiences. Other studies suggest they are one of the best savers of any generation at this age. But like all generations, it’s inaccurate to place blanket labels on a generation that spans almost 20 years.


Where most researchers and studies do concur is that many Millennials have been dealt an increasingly difficult economic hand. And a recent research paper by the Federal Reserve of St. Louis (the St. Louis Fed) titled “A Lost Generation?  Long-Lasting Wealth Impacts of the Great Recession on Young Families” paints at times a rather bleak picture. Those entering the workforce in and after the Great Recession, found a tight job market. Most entered colleges and many stayed for post degrees as the poor economy continued. Many also racked up mountains of student loan debt. Millennials tended to delay life events, like marriage and childbirth, and flocked to the inner city urban areas closer to the jobs they took but did not really choose. Tight credit and high debt made home buying out of reach and rents were high and apartments small. Many do in fact value life experiences over material possessions. All of this has left the home furnishings industry perplexed in its efforts to attract this mass of consumers.

Financial data is emerging which suggests there are three distinct segments to the Millennials based on their proximity to the Great Recession – (1) those that graduated college or entered the job market prior to the Great Recession, (2) those that entered the job market during the recession or during the post-recession high-unemployment recovery period, and (3) those entering after the economy was on its way to recovery (Figure 1).


Those that entered the job market early, prior to the Recession, have definitely fared better than their younger Millennials. The second group hit a job market wall during the Great Recession and many have yet to recover as they took jobs unrelated to their college education at lower salaries. With the tightening of the job market, Millennials turned to colleges, becoming the most educated generation in history.

As Table A shows, 29 percent of Millennial men and 36 percent of Millennial women completed at least a bachelor’s degree compared to just 15 percent of men and 9 percent of women 50 years ago. While the percentage has increased for both sexes with each generation, women now exceed men as college graduates by 7 percent.

Some Millennials aren’t sure how much that education has helped them.  The National Association of Colleges and Employers (NACE) tracks starting salaries by year of graduation and finds that 2004 through 2007, those early graduates averaged starting salaries of $42,619. Salaries in the second group graduating during the Great Recession and partial recovery, 2008 to 2011, averaged $41,607.  But as the recovery has moved forward, 2012 to 2016 (most current data), starting salaries jumped to an average of $48,169.

The Financial Picture

Income in all generations was negatively impacted by the Recession, especially among Millennials and Gen Xers. The overall population of 25 to 34 year olds has not fared as well as the college graduates nor have they fared as well as the older Gen Xers aged 35 to 44 in terms of salary loss (Table C). At $34,067, median income for Millennials has yet to surpass 25 to 34 year olds in 1974 ($34,601 in real adjusted 2016 dollars). Meanwhile 35 to 44-year-old’s median income was not hit quite as hard in the Recession and at $42,012 in 2016 is nearly back to the median income in 2000.

The increasing salaries don’t look too bad one would think, but that’s only part of the picture. Millennials are overwhelmed by debt. According to the Federal Reserve, the average student loan debt for Class of 2017 graduates was $39,400, up six percent from the previous year.

Americans owe over $1.48 trillion in student loan debt spread out among about 44 million borrowers. That’s about $620 billion more than the total U.S. credit card debt, according to the Federal Reserve.

The real financial picture of Millennials and student debt lies in their net worth defined as assets minus liabilities. As shown in Table D, the average net worth for a Millennial just out of college at age 23 is negative $33,984. Even with an average starting salary of $52,569 it takes many millennials a long time to crawl out of student loan debt.

Despite their lack of disposable income, data suggests that Millennials do save more than other generations at the same ages. Most likely due to years of economic instability, Millennials coming into the workforce during the Great Recession and post-recession high unemployment years 2008 to 2012 are the biggest savers among the generations reaching a 6.1% average annual savings rate for 2009 graduates and peaking at 7.6% for those graduating college in 2012. Those graduated prior to the recession show the lowest savings rates, while Millennials starting job employment in 2013 or later range in savings between 4.8 percent and 5.1 percent (Table E).


Being such a large generation Millennials are starting to make their imprint on the workforce. Employed Millennial workers ages 25 to 34 are growing in number and now surpass the number of employed 35 to 44 Gen Xers. At 34.4 million post-college employed workers in 2017, Millennials are now 7.8 percent higher than Generation X in the amount of people in the workforce (Figure 2).

Although Millennials now have the most employees in the workforce, they still lead the way with higher unemployment rates (Figure 3). 4.6 million 25 to 34 year olds are unemployed compared to 3.5 million 35 to 44 year olds and 3.2 million 45 to 54 year olds.

Table F shows the impact and importance of education for the Millennials as it pertains to employment. While each category felt the effects of the Great Recession on the unemployment rate, those with a bachelor’s degree or higher spiked up to 4.9 percent in January of 2010 before leveling out to 2.5 percent in 2017 – just 0.4 percentage points shy of the rate in January 2007.

The percent of Millennials 25 to 34 who are “not in the labor force”, mostly

students and others who are neither working nor seeking work past college age, is in line with Generation X (Figure 4). At 21.8 percent, the older Millennials not in the labor force are only slightly higher then the 20.9 percent designated to 35 to 44 year olds (younger Gen Xers). However, keep in mind that many more Gen Xers are couples where one has chosen to stay at home to care for children while the other is employed.

It’s no secret that Millennials are delaying marriage and children.  And the majority of Millennials are not yet married. The estimated median age at first marriage has climbed up each year for both men and women. As shown in Figure 5, the median age of men getting married for the first time has moved from 26.8 in 2000 to 29.5 in 2017 – an increase of 10.1 percent, while the median age for women has increased 9.1 percent over the same time period, up to 27.4.

It’s often difficult for most people to keep in their heads just exactly where the generations will be in their life cycles over time. The table below shows that even with all of the hype about Millennials, the glut of this generation won’t be fully felt within the home furnishings industry for possibly 10 years as they balloon into their prime furniture purchasing years of 35 to 54 (Figure 6). The leading edge is coming in now.  Meanwhile, the here and now are the Gen Xers.

Many families suffered severe setbacks as a result of the Great Recession especially in their prime earning years. Gen Xers have been able to regain most of that financial loss, but it seems Millennials have fallen further behind. In fact, the Millennials of the 1980s was the only 10-year cohort studied by the St. Louis Fed to worsen from 2010 to 2016. And the outlook going forward is not rosy.

One explanation by the earlier referenced St. Louis Fed’s “Lost Generation” essay is that individuals and families whose heads were born in the 1980s (Millennials) are different. “They generally were too young to be homeowners during the housing bubble. The predominant type of debt they owe is non-mortgage debt, including student loans, auto loans and credit card debt. Because none of these types of debt finance assets that have appreciated rapidly during the last few years—such as stocks and real estate—they have received no leveraged wealth boost like that enjoyed by older cohorts.”

But three factors are on the side of Millennials – time, education, and numbers.  Time implies that these Millennials have many years to garner wealth and may not follow the same path as other generations. The second is that they are the most educated generation, and while expensive, can be extremely important going forward to wealth collection. And the third is sheer numbers.  The Millennials (and Gen Xers) are now the largest voting bloc compared to the Baby Boomers, yet they have historically had low turnout at the polls. But as they mature, this trend will likely reverse and they will begin to politically chart their own course. One thing is certain, Generation Z right behind them is very politically confident and may give the Millennials the push they need.

Comments are closed.
Performance Groups
HFB Designer Weekly