In 2015, millennials eclipsed boomers as the largest adult population in the U.S. According to Richard Fry, Ph.D., a senior researcher with the Pew Research Center, this group will continue to grow with the help of increased immigration and peak in size at 81 million in 2036.
In a NAIOP members-only Advantage Series webinar this week, Fry shared insights into the patterns and predilections of millennials, the most racially and ethnically diverse and most educated generation in the U.S. compared to previous generations. We followed up with Fry after the webinar to get his perspective on additional attendee questions.
Q: Can you comment on the income inequality we see so far within the millennial generation? I can only imagine this is going to get much worse.
A: Yes, if past patterns hold in the future, the income differences between better-educated and less-educated millennials will widen further. In the past, college-educated workers have not only earned more, but their earnings have grown more as the worker ages from early in the career to mid-career. If millennials conform to this pattern as they age, the earnings and income differences will grow as they age into midlife.
Q: Any notable reason why millennials who have obtained the “some college” education level don’t do that much better than high school graduates? For example, do most drop out after one semester or one year?
A: Young adults in the “some college” category are a diverse group. It includes those who have finished an associate’s degree; those who completed three full years of college but did not receive a degree; and those who finished a semester of college and dropped out. As a whole, this group does not get paid much more than those who completed high school with no further education. But the median of the whole conceals quite a bit of variation. Just like with young adults completing bachelor’s degree, major field of study matters significantly for those completing associate’s degree. Some associate’s degree holders are paid relatively handsomely while others are paid similarly to high school graduates.
Is the lack of home ownership among older millennials a reflection of their desire not to own or their ability to get a mortgage?
A: I think the jury is still out on this. Many surveys have asked millennials about their aspirations to be homeowners, including surveys by the Pew Research Center. Millennial respondents have high aspirations to own; I don’t see much evidence that today’s young adults have different preferences toward home ownership. On the other hand, the argument that they cannot financially pay for a home is getting less persuasive. Until 2015, credit conditions were quite tight and it was difficult for those without pristine credit scores to get a home loan. But lending conditions have eased in many metropolitan areas over the last couple of years. And yet millennials have not proceeded to home ownership in many markets. So I think there is a bit of puzzle as to why more millennials are not becoming homeowners, especially now that lending conditions have eased.
The Advantage Series is an exclusive member benefit, delivering expert insights into the latest research to help you make informed business decisions. This webinar was presented on February 20, 2018. NAIOP members can view the full archived webinar and presentation online. Register for the upcoming Advantage Series webinar, “What Does the Tax Cut and Jobs Act Mean to Your Business?” on Feb. 27, 2-3 p.m. ET.