Which cohort do you think makes up the largest part of the labor force? Nope, it’s not baby boomers (aged 53-71) or even Gen X (37-52), but actually millennials (21-36). Consider these stats from Pew Research:
- Over one in three (35%) Americans in the labor force were millennials as of 2017, or 56 million compared to 53 million Gen Xers (1/3 of the labor force) and 41 million baby boomers (1/4 of the labor force).
- While baby boomers and Gen X have already reached their peak and continue to fall as a share of the labor force, the millennial workforce is still growing.
- The oldest Americans born after 1996 (post-millennials) are now also able to work, including 9 million who were employed or looking for work (5% of the labor force) as of last year.
Why does this matter? Recall that a few months ago Larry Fink wrote a letter to CEOs calling on public companies to not just focus on financial success, but do more to help overcome societal challenges. Not only are companies receiving more outside pressure, but also increasingly from within. Millennials, for example, want the companies they work for to help social causes as well.
Millennials have also now grown to an age where they can actually disrupt corporate culture and put their generation’s stamp on management priorities. Although they started at the low end of the food chain early in their careers answering to baby boomers and Gen Xers in senior positions, millennials in their late-twenties and mid-thirties are now assuming more leadership roles.
While millennials can take on greater responsibility the more experience they gain, companies with older senior managements need to cater to this cohort if they want to retain and access the largest pool of the labor force. This is especially evident in Deloitte’s latest annual Millennial Survey, based on the views of +10k millennials (born 1983-1994) across 36 countries and +1,800 Gen Z participants (born 1995-1999). Here were their findings:
- Less than half of millennials think businesses behave ethically (48% vs 65% in 2017 and 58% in 2016) or that business leaders are committed to helping improve society (47% vs 62% in 2017 and 57% in 2016).The majority (62%) also think companies have no ambition beyond wanting to make money, up from 50% last year and 54% in 2016.
- The vast majority of millennials (83%) and Gen Z (80%) believe business success should be measured on more than just financial success. Consequently, there are major gaps between what millennials think businesses’ priorities should be and what they actually are. Whereas they think their organizations’ top priorities are generating profit, driving efficiencies and producing/selling goods and services, millennials think it should be job creation and improving society.
Additionally, 44% of millennials on senior management teams or boards said profits at their companies are prioritized, but only 27% believe profits should be their company’s primary goal. They think their companies should also protect the environment, improve society and innovate more.
- Most young workers (three-quarters) still think multinational corporations have the potential to help solve society’s economic, environmental and social challenges, especially when it comes to education, skills/training, economic stability and cybersecurity.
- Given the mismatch between company and millennial work priorities, almost half (43%) envision leaving their jobs within 2 years (back up to levels from 2 years ago) and just 28% want to stay beyond 5 years. More than half (61%) of Gen Z say they would leave their current job within 2 years if given the choice.
It’s important to point out that millennials still care a lot about pay and that can help engender more loyalty “with the idea that employers should ‘share the wealth’, provide good jobs and enhance workers’ lives”. Especially since older millennials are trying to buy homes and provide for their young families. Still, they were also more likely to want to stay with their company for more than 5 years if they also promote diversity, inclusion and flexibility in where and when they work.
As for where they would go if they left their company within the next 2 years, 62% view the gig economy as a viable alternative to full-time employment. Even 7 in 10 millennials on senior management teams or boards said they could consider taking on short-term contracts or freelance work as an alternative to full-time employment. Why? Higher income and more flexibility/freedom.
- Millennial and Gen Z workers were also asked about “Industry 4.0”, which is “characterized by the marriage of physical and digital technologies, such as analytics, artificial intelligence, cognitive computing and internet of things technology.” Most millennials and half of Gen Z respondents “believe Industry 4.0 will augment their jobs, giving them more time to focus on creative, ‘human,’ and value-added work”.
With that said, 17% of all millennials surveyed and 32% of those whose companies already get a lot of use from Industry 4.0 technology are worried part or all of their jobs will be replaced. Moreover, fewer than 4 in 10 millennials and 3 in 10 Gen Z workers think they have the skills they need to succeed, and less than half of both cohorts think their employers are doing enough to help them understand and prepare for the impending changes with advanced tech in the workplace. They are most interested in building interpersonal skills, confidence and ethical behavior.
In sum, companies who shift their priorities to reflect that of millennials will have a more motivated and loyal employee base, which will help the business’s long-term success. That’s why we often use job-hunting site Glassdoor to look at employee reviews of certain companies. You can see how employees rank their company and CEO, as well as the pros and cons they give their company and their advice to management. We encourage you to do the same in your investment process as companies that allow millennials to disrupt their workplace culture for the better should benefit in the long-term.