Millennials, as a group, are the largest demographic cohort in the United States. They are driving economies, they’re driving behavior, and much to the surprise of baby boomers, they’re becoming a more and more important part of the workforce.
Understanding millennials, and what they’re thinking about, is the mission of the American University. They’re doing an ongoing study of millennial behavior.
To talk about the recently released third annual survey is Dawn Lejon, who’s Executive-in-Residence at American University, Kogod School of Business. Dawn, thanks for joining us.
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LEJON: Thanks for having me.
ABERMAN: Well, you guys have done this for three years and find some really interesting data. Let’s start with some of the baseline things that have run across now three years of surveying. What are you learning about millennials here the D.C. region?
LEJON: Well, the first thing to know is that millennials are actually very traditional in terms of what they want and how they decide on a place where they want to live and work. They look a lot like the baby boomers or previous generations. They care the most about jobs and about affordability–that’s two thirds of their focus. Even though, in the media, you hear a lot about the perks or volunteering or outdoors or bars and restaurants. What they really care about is the meat and potatoes of having a job with a good salary, ideally not so far to commute every day, and they’d like a house with a yard in an affordable neighborhood that again, is not so far away that they can’t get to work in a reasonable amount of time.
ABERMAN: It’s funny to me that something that seems so obvious–that people are just people–that in a way, we have to do, or you have to do a survey to point out to baby boomers and others that millennials are just like them in key ways. Isn’t that surprising?
LEJON: Well, I think the media likes to tie into sensational ideas and when millennials were first coming on as a generation, they are digital natives. They expect everything now. They’re also very educated and very diverse, and the world is their oyster. They are not tied to any particular location. So when we had a bunch of millennials coming to Washington for the first time for the jobs and the salaries, during the recession, they came with a whole different attitude, which is we’re going to have fun, we’re making great salaries, we’re living in a very urban place. We want to take photos of everything and put on Instagram. They’re very experience-oriented and very social.
So all that, everybody looked at and said, wow, they’re a different species. The reality is that, that happens when you’re young and you’re educated and you’re making good money. And then what happens is the millennials get older. The oldest ones are 37 this year, and many of them are married. A lot of them are turning their attention to having children, and with that comes the stark reality of, how do I make ends meet between the great salary I’m making, but the high cost of childcare, the cost of a mortgage. Oh, yeah, and I need to start saving for retiring and, oh, I have a kid, in eighteen years I have to start paying for college. All these things come together and what we’re seeing is more and more that millennials are old enough to have to worry about that in their life stage now.
ABERMAN: So these–I call meat and potato issues, just getting-through-life kind of things. So what does your data show about how this region’s doing on providing those type of opportunities for this largest cohort in our economy?
LEJON: Well, every year we do an index to try to understand how well the Washington area rates on the things that are important to millennials, and this year, we came in continuing to be strong, 127 percent, so 27 percent above the national average–of an average place, what they would deliver for millennials. We remain in the second spot out of the twenty top cities we looked at. The challenge, though, is when you look deeper and you realize in 2016, that was the
first year we saw a net outflow of millennials. Fewer were coming in to backfill those who are leaving, and the question is: are they going to stay in Washington? I think Washington is still incredibly attractive, it’s very vibrant. We have have amazing salaries, 37 percent above the national average. Amazingly, we have kept track with San Francisco, the highest salary market in the country. We are only two percent, less than two percent lower on our average salaries in Washington. So, on the face value when people are evaluating Washington, it looks like a great place. The challenge comes when you live here on a day to day basis, and you realize you’re making a lot of money. You feel like you’re doing it right, but you have nothing to show for it. We have 45 percent of millennials telling us they’re living paycheck to paycheck, and we have over about 40 percent of the people making over $100,000 a year feel like they can’t afford to buy a house in this area. The prices are just so high, that they begin to realize that the salaries are great, but there’s actually not a whole lot of financial advantage.
ABERMAN: The stereotype is that millennials just couch surf. So are you telling me that most millennials want to own homes?
LEJON: As a matter of fact, this year, we asked specifically–and we found out that only three percent of the millennials we talked to had no interest in buying a home ever. Forty percent in the Washington area already own a home of some sort, maybe a condo or a townhouse. We have many of them who want to own a home but can’t afford it, and then some of them are saying I want to own a home, but I’m not sure where I want to settle down yet. We know, for instance, that about 30 percent of millennials said they want to eventually move closer to family or to be with a significant other, so they will be leaving the Washington region, probably in the next three to five years.
ABERMAN: So a few weeks ago, I wrote a column for The Post about the job data that LinkedIn released with respect to the tech workforce–and they pointed out that our region was falling behind other parts of the country for tech talent, and they attributed it directly to housing affordability and transportation. That sounds like your data supports that.
LEJON: Oh, yes, So the the adjectives they come up with to describe the housing situation and traffic are vibrant to say the least. We have atrocious, impossible, insane. Everyone looks around at the housing prices, they’re having sticker shock. I just read a piece of data that 91 percent of baby boomers in the D.C. area are staying put. They are not selling out and leaving. So there’s not so many houses coming out of the market. When they do come onto the market, they’re extraordinarily expensive. Millennials are worried that they won’t hold their value. They also don’t want to spend all of their money on housing payments. Now, traffic is the thing everybody in this area loves to hate, and millennials are no different. Unfortunately, 60 percent of them are in their cars on a daily basis, driving, and that’s been dead consistent for three years, the same 60 percent number, So it’s real, they’re really driving through the suburbs, wherever it is, and it’s frustrating. A number of them say their commute is actually killing them. And when you have to deal with that every day, I think that’s a big motivating factor to go look at some of these smaller cities in the country that certainly are more affordable, and feel a lot more livable.
ABERMAN: So the conclusion I’m drawing from this, Dawn, is that, ultimately, what the data shows is that whatever demographic you select now, the issues of how to make greater Washington grow are becoming consistent.
LEJON: I think, absolutely, it’s housing and transportation, and one of the challenges is, we have great salaries which attract people, but that also means there’s more money in people’s pockets to drive the prices up, especially for housing. And the people that are still staying here have accumulated a lot of wealth because their houses have doubled, tripled, quadrupled in value over time, so they’re in great shape. Those of us in Gen X or baby boomers, but the millennials are in a really challenging financial spot.
ABERMAN: Well, Dawn, thanks a lot for taking the time. And folks, go and check out the report. I’m sure you can find the AU Kogod site. It’s great reading, and I rely on it myself for my research. Dawn Lejon, thanks for joining us today.
LEJON: Thanks for having me.