millennials report

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1 1 ECONOMIC FACTS ABOUT 5 MILLENNIALS The Council of Economic Advisers ber 2014 Octo

2 Contents ... ... ... ... ... 3 Introduction ... 5 Fact 1: Millennials are now the largest, most diverse generation in the U.S. population. Fact 2: Millennials have been shaped by technology. ... ... 7 ... ... ... 9 Fact 3: Millennials value community, family, and creativity in their work. Fact 4: Millennials have invested in human capital more than previous generations. ... ... 12 Fact 5: College going Millennials are more likely to study social science and applied fields. ... 14 - Fact 6: As college enrollments grow, more students rely on loans to pay for post - secondary education. ... 16 Fact 7: Millennials are more likely to focus exclusively on studies instead of combining school and work. .. 18 Fact 8: As a result of the Affordable Care Act, Millennials are much more likely to have health insurance 20 coverage during their young adult years. ... ... ... ... Fact 9: Millennials will contend with the effects of starting their careers during a historic downturn for years to come. ... ... ... ... 23 ... ... 27 Fact 10: Investments in human capital are likely to have a substantial payoff for Millennials. - career employers longer. ... ... 29 Fact 11: Working Millennials are staying with their early ... 31 Fact 12: Millennial women have more labor market equality than previous generations Fact 13: Millennials tend to get married later than previous generations. ... ... 34 Fact 14: Millennials are less likely to be homeowners than young adults in previous generations. ... 37 Fact 15: College - educated Millennials have moved into urban areas faster than their less educated peers. 42 Conclusion ... ... ... ... ... 44 References ... ... ... ... ... 46 2

3 Introduction are the largest the cohort of Americans born between 1980 and the mid , 2000s, generation Millennials - 1 third of the total U.S. population in 2013 . cohort of With the first in the U.S. , representing one - Millennials thirties , most members of this generation are at the beginning of their only in their early and so in the decades to come. careers will be an important engine of the economy The significance of Millennials extends beyond their numbers . This is the first generation to have had I nternet during their formative years Millennials also stand out because access to the they are the . most diverse and educated generation to date: 42 percent identify with a race or ethnicity other than - around twice the share of the Baby Boom er , generation when the y were the same non Hispanic white 2 About 6 1 percent of adult Millennials have attended college , whereas age. only 6 percent of the Baby 4 3 Boomers did so . Yet perhaps the most important of them have come of age during marker for Millennials is that many the oldest a very difficult time in our economy, as were just 2 7 years old when the recession Millennials began in December 2007 . As unemployment surged from 2007 to 2009 , m any Millennials struggled to find a hold in the labor mark et . They made important decisions about their educational and career paths , including whether and where to attend college, a time of great economic uncertainty. during establish he early adult lives have been shaped by the experience of ing their careers at a time when T ir opportunities are relatively scarce . Today, although t economic is well into its recovery , he economy the recession still affects lives of Millennials and will likely continue to do so for years to come . are faring in look at this generation’s adult lives so far, including h This report takes a they n early ow the labor market and how they are organizing their personal lives . This generation is marked by transformations at nearly every important milestone: from changes in parenting pr actices and schooling choices, to the condition of the U.S. economy they entered, to their own choices about home and family. However, in many , Millennials are simply following the patterns of change that began cases generations ago. Millennials are also the generation that will shape our economy for decades to come, and no one understands that more that the President. It’s why he has put in place policies to address the various . This includes policies such as: making stud ent loan payments more challenges their generation faces affordable; promoting digital literacy and innovation; pushing for equal pay and paycheck fairness; supporting investments and policies that create better paying jobs; connecting more Americans to job - t prepare them for in - training and skills programs tha demand jobs; supporting access to credit for those who want to buy a home; and increasing access to affordable health care. And it’s why the 1 Census Bureau. There is no strong consensus about how to define Millennials, though several sources attribute the word to historians Neil Howe and William Strauss, who outlined a theory of social generations in American history. 2 Decennial Census and Amer ican Community Survey. Data for Millennials are for those 1 5 to 34 years old in 2012. Baby Boomers comparisons are for when they were 1 to 34 as surveyed in 1980. 5 3 to 34 years old in 2012. Baby Data for Millennials are for those 1 8 Decennial Census and American Community Survey. to 34 as surveyed in 1980. 18 Boomers comparisons are for when they were 3

4 President will continue to act with Congress and on his own where he can to build on this pro gress to expand opportunity for Millennials and all Americans. 4

5 Fact Millennials are now the largest, most diverse generation in the U . S . : 1 population. Millennials now represent the largest generation in the U nited States , comprising roughly one - third of the t otal population in 2013. What’s more, t he largest Millennial one - year age cohort is now only 2 3 . T his means that the Millennial generation will continue to be a sizable part of the population for many years (Figure 1) . Figure 1: US Population Distribution by Age, 2013 Millions Homeland Millennials* Generation X Baby Boomers 5 2004) Generation (1980 - (1965 - 1980) - (1946 1964) Silent - (2005 Present) Generation 4 (1928 - 1945) 3 2 1 0 51 56 61 66 71 36 41 76 46 31 1 6 11 16 21 26 Age Source: Census Bureau. Many s them apart from other generations. set Millennials , Aside from their numbers ’ diversity Millennial who arrived in the United States as part of an immigrants or the children of immigrants s are that began in the 1940s . The share of people age 20 to 34 who were born in a upsurge in immigration foreign country is now around 15 percent – much higher than it was in 1950 and near the of peak during the last great wave of immigration to the U almost 20 percent seen in 1910 (Figure nited States . 2) 5

6 Figure 2: Share of Population Aged 20 to 34 Born - that is Foreign Percent 25 2012 20 15 10 5 0 1975 2005 1900 1915 1930 1945 1960 1990 Censuses and American Community Survey; CEA calculations. Source: Decennial contributed to the large size of the Millennial generation and helped make it the most has This influx Figure , shows 3 . As war period - the post diverse generation in 15 to 34 who those age the share of - Hispanic white fell 20 percentage points from 1980 to 2012 , while the share reporting identify as non Hispanic ancestry tripled. 6

7 Fact 2: Millennials . have been shaped by technology The past few decades have witnessed astounding advances in technology and computing. Since personal computers were introduced to schools in the late 1970s, technology companies have orm or computer model innovated at startling speed, often rolling out a groundbreaking new platf uch of this period of innovation coincided wit h Millennials’ childhoods , every year. it has Because m and seems to have affected their shaped the ways that Millennials interact with technology in their own work lives. expectations for creativity and innovation previous generations and a quarter of Millennials Millennials are more connected to technology than 4 believe While all that their relationship to technology is what makes their generation unique. generations have experienced tech nological advances, the sheer amount of computational power and access to information that Millennials have had at their fingertips since grade - school is unparalleled. C omputational processing power has roughly doubled every 2 years, and storage prices continue to 5 6 In 1980, IBM’s first gigabyte hard drive weighed 550 pounds and cost $40,000. drop. Today, consumers have access to 3 terabyte hard drives — 3000 times the size — that weigh under 3 pounds and cost around $100. Under these trends, Millennials have come of age in a world in which the 7 frontiers of technology have appeared unlimited. At the same time, the costs of creating and distributing all kinds of digital content – from books to 8 music to software – have fallen dramatically. This creates o pportunities for this generation to be pioneers in production, as well as consumption , of technology. One study found that more than half of the Millennials surveyed expressed interest in starting a business. And although several illennials M - kn became well own entrepreneurs in their 20s, this generation is just beginning to reach the peak age 9 occurs in one ’ generally for entrepreneurship, which s 40s or early 50s. In addition to creating opportunities for entrepreneurship, advances in computer processing power, I nternet, have changed how Millennials along with widespread access to cell phones and the communicate and interact with one another. Millennials use social media more frequently and are 10 Three - quarters of Millennials have an account on a even more likely to sleep near their cell phone. with only half of Generation Xers and less than a third of the Baby social networking site, compared 11 Boomers. The impacts of these practices have extended beyond Millennials’ peers to their families. For instance, the Wall Street Journal reported that this is the first generation to also have tech savvy 4 Pew (2014). 5 http://appinventor.mit.edu/explore/ Waldfogel (2013); MIT App Inventor, 6 imeline: 50 Years of Hard Drives, http://www.pcworld.com/article/127105/article.html PCWorld, T 7 Berkeley DataScience, ht tp://datascience.berkeley.edu/moores - law - processing - power/ . 8 Waldfogel (2013); MIT App Inventor, http://appinventor.mit.edu/explore/ . 9 Young Invincibles (2011); Parker (2009). 10 Taylor and Keeter (2010) . 11 Ibid. 7

8 parents, and that some Millennials use texting or online chat to have running conversations with their 12 parents throughout their day. 12 July 30, 2013 “ Mom, Stop Calling, I'll Text You All Day ” Wall Street Journal http://online.wsj.com/news/articles/SB10001424127887324354704578636391784495074 8

9 F act 3: Millennials value community, family, and creativity in their work. Millennials are not just via social networks; they value the role that they play in virtually connected . For instance, high school seniors today are more likely than previous generations their communities and that they want to be to state that making a contribution to society is very important to them s . in their communit ies leader T his community - mindedness also includes a strong connection to family. Millennials ve close relationships with their parents , and as high school students , roughly half say ha that it is important to them to live close to their friends and family, compared with 29 percent of Baby 13 Boomers and 40 percent of Generation Xers . Figure 4: Percent Reporting Life Goals as Being "Quite or Extremely Important" Percent 100 Baby Boomers Generation X Millennials 80 60 40 20 0 Live close to Contribution Children Time for Find new recreation better off friends and ways to to society family experience things the Future, 1976 2011; CEA calculations. - Source: Monitoring children (a population comprised entirely of Millennials that 9 in 10 Gallup survey found that A 1997 year) reported high levels of closeness with their parents and were personally happy with that 14 s to work, where some companies Their tight relationship with their parents extend relationship. 15 of their Millennial empl . close o Millennials report establishing relationships with parents e Th ’ yees relationships with their parents might be related to the greater time they spent with their parents According to Pew (2014), h ours spent parenting have increased f or both fathers and growing up. mothers, tripling for fathers since 1985 and increasing by 60 percent for mothers , as shown in Table 16 Ramey and Ramey (2010) show that these increases have been particularly pronou nced among . 2 - educated parents, with college college - educated mothers increasing their childcare time since the mid - 1990s by over 9 hours per week, while less educated mothers increased their childcare time by 17 . over 4 hours per week only 13 Monitoring the Future (1976 - 2011). 14 Howe and Strauss (2000). 15 - their - call - to - bosses - their want - really - millennials - Harvard Business Review http://blogs.hbr.org/2014/04/do parents/ - 16 Pew (2014). 17 Ramey and Ramey (2010). 9

10 Table 1 Average Number of Hours Fathers Mothers Year 1965 10.2 2.5 8.6 1975 2.6 2.6 8.4 1985 1995 4.2 9.6 2000 6.8 12.6 6.8 2005 13.6 2010 7.3 13.5 7.3 2011 13.5 So urce: A merican Time Use, P ew Research Center analysis, http://www.pewresearch.o rg/data- trend/so ciety-and-demo graphics/parental- time-use/ ork, Millennials When it comes to w want to be are mostly similar to previous generations: they successful, and they want the type of prosperity that means that their children will be better off. They to be consider creativity more likely are somewhat to report that they a than previous generations important job feature. Perhaps this is no surprise for a highly very ion for whom connected generat - part of their upbringing. On the other hand, they are less likely to report that technology was a key or one where they can see results or have advancement opportunities , is having an interesting job, very important. Figure 5: "Very Important" Job Characteristics Among High School Seniors Percent 100 Baby Boomers Generation X Millennials 90 80 70 60 50 40 30 20 10 0 Creative Advancement See Results Interesting Earnings Source: Monitoring 2011; CEA calculations. - the Future, 1976 Millennials report that earnings are very important to them in a job, breaking the data many While ng women. Each cohort of young down by gender reveals that this change is driven primarily by you name women is more likely than the last to earnings as a key job feature, while the importance of 10

11 earnings has been stable for men. The result is Millennial women have aspirations that are similar that to their male peers. I n sum, quality of life appears to be a focus of this generation: Millennials value staying close to family and friends, having free time for recreation, and working in creative jobs. However, they also want to , as well as on make a positive social impact on their own children and communities society as a whole. 11

12 Fact Millennials have invest ed in human capital more than previous : 4 . generations M ore M illennials have a college degree than any other generation of young adults. In 2013, 47 percent s 25 to 34 year - old received a postsecondary degree (associate s, of bachelor’s , or graduate degree) and an additional percent had completed some postsecondary education , as F igure 6 18 shows. Also, because the rate of young workers with some post - secondary education but no degree has been flat while the share with a degree has risen, more students are completing the degrees they start after high school. People Ages 25 Figure 6: to 34 By Educational Attainment, Percent 50 45 Postsecondary education (degree) 2014 40 35 30 25 Postsecondary education (no degree) 20 15 10 5 0 1992 1996 2000 2004 2008 2012 Source: Current Population Survey; CEA calculations. returns to education for workers Increasing college enrollment is art a response to decades of rising in p inequality income and heightened between the college - educated and the less - educated. Millennials’ confers large commitment to higher education is therefore a rational response to a labor market that , rewards on more educated workers. uring recessions enroll in Moreover, d young people tend to 18 This cyclical pattern reflects both a also tend to stay in school longer. school in greater numbers and l as lower opportunity cost of schooling, make one ’ s skills competitive in as wel a stronger incentive to a tough job market. attend graduate school than previous generations . Millennials are also Among 18 to 34 more likely to - olds, college enrollment stood at 19 percent in 2010, up from 15 percent in 1995. Graduate school year for the same age enrollment group has increased at an even faster rate, jumping from 2.8 percent in 1995 to 3.8 percent in 2010 – a 35 percent increase. there has been an unprecedented expansion of higher With so many Mill ennials enrolling in college , - income and underrepresented minority students. F igure education to lower 7 shows that enrollment 18 Card and Lemieux (2000); Long (2013). However, note that Oreopoulos, von Wachter and Heisz (2012) find that unemployment rates have insignificant impacts on college duration. 12

13 of - granting institutions has increased over time, but more recent gains have all students in degree been greatest among black and Hispanic students. Since 1995, enrollment for blacks age s 18 to 24 increased 9 percentage points and enrollment for Hispanics age s 18 to 24 increased 17 percentage s, in percentage terms, for blacks and Hispanics than for whites. points. These represent larger increase Research has found that enrollment of students from low - income families is higher among also 19 previous generations . Millennials than 19 Bailey and Dynarski (2011). 13

14 ence and Fact College - going Millennials are more likely to study social sci : 5 applied fields. Millennials are more likely to study social science or applied fields — like communications , criminal that do not library science — liberal arts fit into traditional justice, and curricula , but correspond more (Figure directly to specific careers 8 ) . Figure 8: Major Field of Study, by Generation Percent 25 Baby Boomers Generation X Millennials 20 15 10 5 0 - CEA calculations. Source: American Community Survey, 2009 2012; 64. The - born 1946 79, Baby Boomers: - Note: Millennials: born 1980 or later, Gen X: born 1965 "applied" category includes communications, library science, criminial justice, culinary arts, and similar fields. since Baby a significant decline in the share of students majoring in education There has also been , as shown in Figure 8 is decrease Boomers were in college Th is mostly explained by a sharp move away . from education degrees among female college students. About 35 percent of women graduating from did in the early 1970s earned a degree in an education - related field, but only college about 12 percent same period women over the in 201 1 , increasing . Business degrees have become more popular among after peaking percent from 9 80s 19 - in the mid of the class of 2011, percent of the class of 1970 to 16 for both men and women . generations to major in field s like business and Millennials are also somewhat less likely than previous is health (which includes pre - med and nursing) . T slightly he share of studying STEM fields Millennials number of majors in these fields has lower than that of past generations ; h owever, the absolute in ent increased over time as college enrollm the number of students has expanded , just not as fast as 20 other majors . he share of Millennials choosing , t connected generation - for a technologically urprisingly Perhaps s decline has been most has fallen over time, and this computer and information science majors of women graduating with a bachelor ’ s degree In 1987, 2.9 pronounced among women. percent 6 percent of all received a degree in computer and information science, and women comprised 3 percent contrast, in the cla ss of 2011, only 1.1 of women graduated computer science graduates. In 20 Digest of Education Statistics . . 14

15 with computer science degree s , and women comprised only 18 percent of all computer science graduates. Over the same period , the share of men graduating with such degrees fell only slightly, from 5.7 percent o 5.4 t percent . This trend in computer science stands in stark contrast with other highly - compensated fields, such as medicine, dentistry, and law, where women’s participation has increased 21 over this period. 21 . CEA (2014b) 15

16 Fact 6 As college enrollments grow, more stud ents rely on loan s to pay for : secondary education - . post loan debt surpassed $1 trillion by the end of the second quarter of 2014 , Total student outstanding making it the second largest category of household debt . In part, this increase in the aggregate level student debt is due to greater enrollment among Millennials outstanding and to the changing of - income families who need to composition of students, including a larger share of students from lower e loans take out mor rising tuition as state , as discussed in Fact 4. Other contributing factors include: ir home s to offset governments have cut funding; parents’ impaired ability to use the equity in the their children’s college costs ; and the fact that students are taking longer to repay some portion of average per borrower debt increas ed from $24,000 in real their loans. Consistent with these factors, 22 to $30,000 in 2012 . 2004 Since 2012, total originations have fallen, and since 2010, originations p er - term borrower have fallen; however, the fraction of students borrowing remains high from a longer perspective. student loans during the 2013 - 14 school year, up from A round half of students borrowed 23 1990s . around 30 percent in the mid - earnings between college - and high school - educated workers both large and growing, With the gap in - d Millennials are more likely to earn higher wages and be employed than those without educate college degree. A four - year degree yields approximately $570,000 more in lifetime earnings than a a college 24 - year degree yields $170,000 more. high school diploma alone, while a two I mportantly, research finds that the earnings gains from attending college are broad - , as both lower - skilled students based 25 higher - skilled students attending elite colleges stand to benefit . attending basic college programs and 22 National Postsecondary Student Aid Study . 23 Goldman Sachs (2014). 24 U.S. Treasury (2014). 25 - See, e.g. Zimmerman (2014) for estimates on low skilled youth, and Hoekstra (2009) for estimates on more skilled students. 16

17 - However, one concern with rising average student debt levels is that a non trivial minority of ial difficulties managin and paying down their debt. Recent increases in borrowers might face financ g 26 the delinquent student loans point to some of the challenges that borrowers face . prevalence In of addition, the defaults appear to be concentrated among borrowers who do not graduate from a four - year institution and those attending for - profit instit utions. Since borrowers may receive lower also institutions from such returns to their education , the burden of paying back their loans may present 27 ge. n even greater financial challen a Figure 10: Percentage of Borrowers Who - to Six Years after Initial Post Defaulted on Their Loans up Secondary Enrollment Percent 35 29.4 30 25 19.2 20 16.8 15 10 3.7 5 0 Borrowers who Borrowers who Borrowers who Borrowers who dropped out graduated graduated with a dropped out of for- certificate from for- profit, less-than- profit, less-than- four-year institutions four-year institutions Source: Beginning Postsecondary Students, BPS: 2004/2009; CEA calculations. 26 Federal Reserve Bank of New York (2 014). 27 Deming, et al. (2014). 17

18 Fact 7: Millennials more likely to focus exclusively on studies instead of are combining school and work. With college enrollments at historic highs there has been a corresponding decline in labor market year - olds . As Figure 1 1 shows , about 90 percent of young adults are participation among 16 to 24 either enrolled in school or participating in the labor market. This share has been flat since the late 1980s, while labor market participation itself has been declining for this group sin ce the late 1970s. Much of the decline in participation has occurred among students, as students have become more likely to focus on school alone rather than combining school and work. Millennials, in particular, have been less likely to work while enrolled in high school. Since 2000, labor force participation rates among high school and college students have fallen more sharply than those 28 who are not enrolled 2 . , as shown in Figure The result is that more students are focused exclusively 1 studies during school years. on their On the other hand, labor force participation has been relatively stable f or 18 to 24 year - o lds who are not in school . Although participation has also declined somewhat for very young non - enrolled individuals ages 16 to 18 , this group is very small and shrinking over time as fewer students are dropping out of high school . 28 Clayton (2012) also finds that Scott - college students have become less likely to work for pay while enrolled over this period. 18

19 Figure 12: Labor Force Participation by Enrollment Status , 1989 - 2013 Percent 90 Not Enrolled, 24 18 - 80 Not Enrolled, 16 - 18 70 60 50 24 Enrolled in College, 18 - 40 Enrolled 18 - in High School, 16 30 20 1997 2011 2009 2005 2003 2001 1999 1995 1993 1991 1989 2007 2013 Source: Current Population Survey; CEA calculations. time students. - time and part - full Note: Enrollment includes Focusing school enables students to invest more time building skills that will be highly exclusively on rewarded in the labor market later on. Moreover, r esearch suggests that the returns to working during 29 the school year, particularly while in high school, have declined over time. These trends in . As Millennials , these after finishing school enter the labor market participation make economic sense off for the economy as a whole ents can also start to pay investm . 29 Baum and Ruhm (2014). 19

20 Fact 8 : As a result of the Affordable Care Act, Millennials are much more during their young adult years likely to have health insurance coverage . Millennials have much better health insurance options during As a result of the Affordable Care Act, their young adult years than past generations. Since September 2010, young adults have generally Previously, you ng been eligible to remain on a parent’s health insurance policy until they turn 26. adults frequently lost access to a parent’s plan when they turned 19 or graduated from college. In of the beginning of 2014, addition, as many young adults newly qualify for tax credits to purchase health insurance coverage through the Health Insurance Marketplaces or Medicaid in States that have accepted Federal funding to expand their Medicaid programs. Affordable Care Act’s dependent coverage provision took effect in 2010 through the From the time the first quarter of 2014 , the uninsurance rate among individuals ages 19 to 25 fell by 13.2 percentage 30 , a 40 percent decline . points In the first quarter of 2014, the share of young adults without health insurance coverage was 20.9 percent, the lowest young adult uninsured rate recorded since the 31 National Health Interview Survey began using its current design in 1997. Other analyses using private survey data show that overall insurance coverage continued to expand during the second quarter of . Moreover, 2014, so these estimated gains are likely to grow in the coming months predict analysts 32 that coverage will continue to expand in the years ahead. Figure 13: Uninsurance Rate Among 19 to 25 Year - Olds Percent 50 45 Dependent Coverage 40 1st Open Expansion Enrollment 35 30 25 20 2014:Q1 15 10 5 0 2006 1997 2000 2003 2009 2012 2015 Health Interview Survey; CEA calculations. Source: National Having health insurance has been shown to improve access to health care, health outcomes, and 33 R esearch focused on the Affordable Care . financial security Act’s dependent coverage expansion has 30 m 2009:Q4 - 2010:Q3. The dependent coverage This change is measured relative to the average uninsurance rate fro provision took effect on September 23, 2010, a week before the end of 2010:Q3. 31 Cohen and Martinez (2014). 32 Sommers et al. (2014); Long et al. (2014); CBO (2014); Sisko et al. (2014). 33 ). a CEA (2014 20

21 found evidence for similar effects . Researchers have found that in tandem with the sharp increase in law’s enactment , young adults became insurance coverage following the less likely to delay or entirely 34 - of e to cost and markedly less likely to face large out pocket medical expenditures. forgo care du - Several studies have also concluded that these newly insured young adults are more likely receive - several types of inpatient and outpatient care while another found that , they are more likely to report 35 being in excellent health. Greater access to health insurance coverage during young adulthood may also outside the workplace important labor market benefits generate workers to obtain additional schooling or c hoose by allowing the jobs that best match their career goals. Research examining the Affordable Care Act’s dependent coverage expansion has documented increased school enrollment among young adults, and earlier gains in ultimate educational attainment as well research examining similar state laws found significant 36 as higher wages later in life. Other research has similarly found that the Affordable Care Act’s dependent coverage expansion reduced employment lock and increased labor market flexibility , 37 allowing workers to change jobs without the fear of losing health insurance . Millennials are also poised to benefit from another important development in our nation’s health care oldest system: the striking slowdown in the growth of health care costs. From the time the Millennials were born through when they turned age 25 in 2005, private employers’ costs for health benefits grew at an average annual rate of 5.4 percent, adjusted for inflation. But in recent years, the growth of real health benefit costs has fallen dramatically, averaging just 1.1 percent over the last two years, about prior average (see Figure 14) 80 percent lower than the empirical evidence . Economic theory and d that higher benefit costs are ultimately borne by workers in the form of lower wages and emonstrate 38 salaries. As a result, if the dramatic slowdown in the growth of health benefit costs persists in the years ahead, it will help drive faster growth in wage s and salaries for Millennials relative to their predecessors. 34 Sommers et al. (2013). Blum (2012). Chua and Sommers (2013). 35 Antwi , Moriya, and Simon (201 4 ); Blum (2012); Saloner (2014); Chua and Sommers (2014). 36 Depew (2012); Dillender (2014). 37 Hulbert (2012). Antwi, Moriya, and Simon (2013). 38 Summers (1989); Gruber and Krueger (1991); Gruber (1994); Baicker and Chandra (2006). 21

22 Figure 14: Growth in Employer Health Benefit Costs, - 2014 1981 - Year - Year over Percent Growth 25 - Cost Index Health Benefits Employment 20 15 10 2014:Q2 5 0 Index GDP Price -5 2000 1980 1990 2010 Source: Bureau of Labor Statistics, Bureau of Economic Analysis; CEA calculations. 22

23 Fact 9 Millennials will contend with the effects of starting their careers : downturn for years to come. during a historic Millennials are currently about a third of the labor force and, as a generation, they have faced substantial challenges in entering the workforce during the most pronounced downturn since the Great Recession. The overall unemployment rate for young workers between ages 18 to 34 peaked at over 13 percent in 2010 easonally - adjusted basis . Since then it has come down 4.7 percentage , on a s points to 8. 6 percent in September 2014 . While it remains elevated, the labor market recovery and decline in the unemployment rate has recently been faste than any time since the early 1980s. r Between June 2013 and June 2014, the unemployment rate of Millennials declined by 1.8 percentage points, the largest reduction in unemployment for this age group also since the early - 1980s. During this period of rapid decline in the unemployment rat , the number of employed M illennials increased e by 990,000, a noticeable acceleration from the 786,000 M illennials that found work during the year - earlier period. Examining the twelve month average , allows us to look s of various measures of unemployment at how much different for this age group compared to their indicators of unemployment have recovered he for 12 - month average of the unemployment rate as of August 2014 prerecession averages. T recession average, broadly in line with illennials is three - quarters of the way back to its pre - M roughly 39 the extent of recovery for other groups. T he recent improvement in labor market conditions for Millennials broadly mirrors that of the broader population, as do the outstanding challenges. The fraction of Millenni als unemployed for less than 26 weeks has recovered more than the fraction of - term unemployed, just as is the case for the population as a whole. Long long term unemployment - remains a challenge for Millennials and for the country in general, as we work to get more of the long - term unemployed back into employment. 39 Because seasonally adjusted data for this age group is not available, we examine 12 - month averages. Since the labor market continued to improve over the past 12 months , these averages will understate the extent of recovery. Current at the time this report was published. Population Survey Microdata were only available through August 2014 23

24 indicators tell a similar story — Other Millennials have made a substantial labor market recovery, while is not complete and is slightly lagging that of other age groups , consistent with prior that recovery . joblessness also indicate that Broader measures of recessions the recovery is making progress. For example, measures of unemployment that account for people who are discouraged look ing for from work or as of the available for work und er certain conditions were roughly 70 percent back are only , while those that include 12 - month average ending in August 2014 to their pre - recession average people who are working part - time, but would prefer full - time hours were 55 percent recovered . unemployment rate has recovered similarly among Millennials regardless of The education, however, this similar ity masks big differences in the levels of unemployment by education. T he unemployment 3 rate of 25 - 34 year old Millenn ials with a college degree was .7 percent in 2013 , compared to 13.5 percent among those less than a high school education. The pace of the recovery for younger age groups is in line with the pattern we typically see after a recession , as shown . Younger 6 yet more work remains to be done to ensure a full recovery in Figure 1 have less experience and more tenuous connections to employers than older workers, so they workers are often laid off in greater numbers and have to compete against more experienced workers for new 24

25 jobs once recovery fully from a begins. They therefore tend to be among the last groups to recover recession. The Great Recession likely will have important implications for Millennials’ future labor force outcomes, since research finds that macroeconomic conditions in childhood and young adulthood are important determinants of future earnings and financial behavior. Early career economic conditions have large and lasting impacts on lifetime wages, particularly for college graduates. R esearch shows that r market during a recession can result in substantial earnings losses that persist entering the labo 40 , with negative effects lasting longer for college graduates . for more than a decade Workers who start their careers in a recession earn 2.5 to 9 percent less per year than those who do not for at least 15 years after starting a career. Research further suggests that one reason for these lower earnings is that 41 new entrants take jobs that are a worse fit for them when they start their careers in a recession. However, researc h also shows that perhaps the single most important determinant of a person’s income is their level of education. And as the most educated generation in history, this will tend to — and help t o offset any longer - term boost earnings for Millennials over the course of their lifetimes harms from the Great Recession. Millennials themselves remain largely optimistic about their ability to move up socioeconomically, with over half agreeing that people like them have a good chance of improving their standard of liv ing. While this number has been trending down in the wake of recent economic turmoil, following a more long standing decline that began in 2000 ( - Figure 1 7 ) , Millennials, like all young people, are more optimistic than older respondents . 40 . Kahn (2010); Oreopoulos et al. (201 2 ) , Wozniak (2010) 25

26 Figure 17: The Way Things are in America, People Like Me and My Family Have a Good Chance of Improving Our Standard of Living: Do You Agree or Disagree? Percent 100 90 34 Year Olds - Agree Rate 18 to 80 70 60 35 to 65 Year Olds Agree Rate - 50 40 30 20 10 0 2002 2000 1998 1996 2012 2010 2008 2006 2004 1994 2012; CEA calculations. Source: General Social Survey, 1994 - Overall, these economic conditions may affect adult financial behavior and beliefs about success and the role of institutions in society. Individuals who experienced the Great Depression invested less and 42 ives. pursued more conservative investing strategies throughout their l More recent economic turmoil has bigger impacts on behavior and that these impacts are most pronounced for younger savers. This suggests that the Great Recession will impact early savings and investment behavior among Millennials, but at this point, it is still too soon to know how large these impacts will be. 42 Malmendier and Nagel (2011). 26

27 Fact 10 : Investments in human capital are likely to have a substantial payoff for Millennials. earn individuals with only a high school diploma, a gap that Recent college graduates continue to out - , the difference between median earnings for has been increasing over time . The college premium , increased from 60 percent in 2004 to roughly 70 percent in 2013. college versus high school graduates o ing a college degree (associate H s or bachelor’s) results in a much lower probability of having ld to s earning income tax bracket — 16 28 percent for college degree holders versus 37 to in the lowest 41 percent for those with no college degree (Figure 1 8 ) . Bach elor’s degree holders are also 6 times a high school degree. more likely to have earn ings in the top income tax bracket than those with only In addition to higher wages on average , individuals with a college degree are less likely to be earning unemployed. As of September 2014 , the unemployment rate for those with a bachelor’s degree is around 3 percent, compared with over 5 percent for high school graduates. Figure 18: Earnings Distribution of Workers Ages 25 to 34 in 2013 Percent Bachelor's Degree 9 11 16 11 15 14 24 Associate Degree 17 28 6 8 19 8 14 Some College 10 37 7 16 20 4 5 High School Diploma 16 9 3 22 4 41 6 $30,000-$40,000 $20,000-$30,000 $1-$20,000 $40,000-$50,000 $50,000-$60,000 $60,000-$70,000 $70,000+ Source: Current Population Survey Annual Social and Economic Supplement, 2014; CEA calculations. Note: Percentages may not sum to 100 because of rounding. 10 Returns to education are 5 to 10 percent per year of schooling, with most estimates in the 7 to 43 - The gains from a college education are high, both for lower percent range skilled students attending . 44 basic college programs and for stronger students attending colleges. Median real hourly selective wages for 21 to 25 year - old college graduates are even higher than median real hourly wages for 26 to re 34 year non - college graduates old , who have had more time in the labor market. College therefo - remains a strong investment for most students — and will raise income levels for Mille nials for decades well above where they would have been without those investments . to come 43 ). Psacharopoulo s and Patrinos (2004);Card ( 1999 44 See, e.g. Zimmerman (2014) for estimates on low - skilled youth, and Hoekstra (2009) for estimates on more able students. 27

28 While education remains a good investment, associated with several Millennials still face challenges decades of slow wage growth compounded by the Great Recession . As a result Millennials have seen – slower wage growth than earlier generations of young adults . The typical employed c ollege graduate his or who entered the market in the mid - to late - 1990s saw her wages increase by around 50 percent between the ages of 23 and 28 This indicator of wage growth for young workers declined to 24 percent . in 2001 and 2002, then recovered somewhat to exceed 30 percent before falling again to under 25 percent for college graduates who entered the labor marke t at the start of the Great Recession. Educated Workers - Figure 19: Wage Growth for College Between Ages 23 and 28, by Cohort Percent 60 50 40 30 20 10 0 CEA calculations. ; 2008 - Source: Current Population Survey, 1994 Note: Cohorts are grouped by the year in which individuals turned 23. 28

29 Fact 11 Working Millennials are staying with their early - career employers : longer. Millennials are sometimes characterized as lacking attachment or loyalty to their employers, but i n Figure 2 0 fact, as contrary to popular perceptions Millennials actually stay with their employers shows, longer than workers did at the same age s Generation X the fact that Millennials face a . This reflects labor market characterized by longer job tenure , fewer employer switches a nd other types of career 45 transitions, and lower overall fluidity in the labor market . Figure 2 0 shows that Millennials are less likely to have been with their employer less than a year than Gen eration X workers were at the for same age, and they are more likely to have been with their employer for a fairly long period like 3 to 6 46 years. Figure 20: Job Tenure in Years for Millennials and Generation X at Ages 18 to 30 Percent 50 45 40 35 Generation X 30 25 Millennials 20 15 10 5 0 5 <1 6+ 1 4 3 2 Tenure Supplement, 1996 - 2010; CEA calculations. Sources: Current Population Survey Job - Note: Data for Generation X (born 1965 1979) reweighted to match age distribution of Millennials (born 1980 or later). has important advantages in terms of job oung workers spending more years with their employers Y security, the benefits of learning on the job, and the additional productivity associated with reduced turnover. To the degree that the increase in tenure reflects improved job matches it represents a come with potential trade - offs. . Switching jobs lopment. But longer tenures has favorable deve the same historically been a major source of wage growth for young workers, and longer spells with employer raise s concerns that reduced fluidity of labor markets may be curtai ling wage growth, 47 particularly for young workers. The flip side of increased job tenure across the economy may be the fact that when people become unemployed they stay unemployed for longer. This has been reflected in the unusually large rise in term unemployment in the wake of the recession, a fact that has also affected young workers as - long 45 Davis and Haltiwanger (2014); Hyatt and Spletzer (20 13). 46 Based on CEA regression analysis when controlling for age and demographic characteristics like educational attainment, gender, and race and ethnicity. These are statistically significant differences. Microdata for this analysis are ailable through 2010. currently only av 47 Topel and Ward (1992). 29

30 - term unemployment appears to have trended up in recent shown in Figure 21. Moreover, long unemployment in their early years decades. This means some young workers will face longer spells of employment than did past cohorts, which may reduce earnings for affected workers as build ing . experience takes more time Again, education can play a critical role because the increased educational will tend to go in the opposite direction, reducing unemployment and helping attainment of Millenials them build job experience over time. 30

31 Fact 12 Millennial women have more labor market equality than previous : generations Millennials are not only the most highly educated U.S. generation to date, but a large r share of that increase has come from the educational attainment of women. Millennial women are attending college and attaining degrees in greater numbers than in the past. Women have closed an educational 48 ainment gap with men that dates back to World War II, as shown in Figure 22 . att In fact, starting in the late 1990s, just as the first Millennial cohorts were completing high school, women began to out pace men in completion of both four - year college degrees and post - college educational attainment. That Millennial women on average exceed Millennial men in terms of educational attainment means that they account for an increasingly large share of our skilled workforce and enter the labor force with early car eer earnings and employment rates that are considerably closer to their male peers than past generations. Figure 23 shows that hourly wages, earnings, labor force participation, and employment for young women have risen relative to those for young men in e very decade since 1980. 48 Goldin, Katz and Kuziemko (2006). . 31

32 Millennial women are making a strong start in the labor market because they are reaping the benefits of their greater investments in education, but Millennial women are not the only beneficiaries of their investments in education and hard work. Their higher earnings translate into greater household income for their families. This is critical to the one in four Millennial households with children where the mother is the sole breadwinner, an arrangement that is more common for Mi lle nnials, as shown Women’s incomes are essential to supporting the well in Figure 24 . - being of even more families since 49 all parents work in roughly 70 percent of Millennial households with children . The benefits to working for Millennial women are grea ter, and their incomes are more important to their families, than for past generations of American women. Young men and women recognize the 49 Current Population Survey, March Supplement 2014. CEA calculations. 32

33 important role that women’s earnings play in the household. Almost all young men and women think that women with sch ool age children should work and more than half think that women should work 50 (Figure 25 when they have children younger than school age However, there is a large gap in the ). views of men and women. The share of women who think that women should work while they have pre - school aged children has grown rapidly in recent years. Focusin g on young women ages 18 to 22 reveals that as of 2002, 82 percent believed that women with young children should work. Men’s attitudes have moved less in recent years and remain below that of women, with only roughly 50 percent of men agreeing. The gender disparity may reflect the fact that women recognize how d ifficult it is for them to reenter the labor force after stepping out for several years. Yet, both men and women, recognize the challenges of balancing work and family obligations, a factor that may influence their preferences about women working with smal l children. 50 General Social Survey 33

34 Fact 13 Millennials tend to get married later than previous generations . : 9 50, the median age at which both men and women have married has steadily increased. In Since 1 men first married at age 22.8 and women at age 20.3 by 2013 the median 1950, marriage age ; increased by more than 6 years for both genders, reaching 29.0 and 26.6 for men and women respectively. As more young adults delay marriage , the fraction of young adults who are currently married has fallen . Millennials have continued on this path and are marrying later, with more of them remaining unmarried in their 20s. In 2013, only 3 0 percent of 20 to 34 year - olds were married, 51 compared to percent in 1960. 77 Many factors explain the later marriages including the fact that those with more education (a group whose size has been increasing over time) tend to marry later . However, college - educated Millennial s are more likely than the rest of their peers to be married. - e ducation This reflects a shift in marriage in 1980, those with a college - This difference is patterns: degree were the least likely to be married. , women with largely reflective of changes in the marital behavior of women. For much of history - degrees were the least likely among thei college decades , college - r peers to ever marry. In more recent 52 educated women caught up, largely by marrying at later ages . For instance, among college graduates , 20 percent had not married by age 35 in 2000, yet 43 percent of those married within the next 10 53 yea The fact that so many now marry later makes it difficult to predict what marriage rates will rs. ultimately look like for this generation. Although Millennials are delaying marriage, this does not mean that they do not want to marry. As high school seniors, over 80 percent of Millennials say that they think that they will marry, more than 51 Decennial Census (1960); American Community Survey (2013). 52 Isen and Stev enson (2010). 53 Decennial Census (2000); American Community Survey (2010). 34

35 Generation Xers Baby Boomers did at similar ages . Similarly, they are more likely to believe that and they will have kids. Later marriage and lon ger time in school are also connected to delaying family formation until later in Figure 8 2 life. shows that age at first birth has risen considerably over time for women with advanced education , particularly for those with an advanced degree. Delayed family formation may also be a rational response in achieving both career and family aspirations. Most Millennials grew up in a household where all parents worked, and their children are . Accordingly, most Mille even more likely to live in such a household nnials will be working at the same time they are helping care for their families. 35

36 B is difficult for many workers, particularly those who lack access alancing family and work obligations 54 . While Millennials are mo to flexible work arrangements or paid leave re likely than older workers to have access to flexibility in where and when they work, only 45 percent have access to paid leave 55 (compared to about 66 percent of older workers). Millennials report that having a career and having t a family is important, bu at this stage, they may be focusing on establishing a career. Family formation may come once their careers are established, and they have higher earnings and are more likely to . have access to workplace polices that help them balance work and family 54 CEA (2014b). 55 American Time Use Survey (2011); CEA calculations. 36

37 Fact 1 : Millennials are less likely to be homeowners than young adults in 4 previous generations. Entering adulthood during the Great Recession and recovery has not only affected Millennials’ In the schooling and employment decisions, but also their housing and household formation patterns. share of 18 to 34 year aftermath of the Great Recession, the o lds living with their parents increased - from 28 percent in 2007 to 31 percent in 201 4 – which is a notable increase even if the actual magnitude falls well short of some popular perceptions Correspondingly , the pace of household . formation is low and the “ headship rate” among Millennials – the rate at which Millennials head their own households – has fallen . With fewer Millennials as independent renters or homeowners, the demand for housing and the pace of residential investment is likely lower than the lev el implied by more typical rates of household formation and headship. As discussed in Fact 3, Millennials have stronger relationships with their parents than previous lives . Perhaps it is generations and p arents of Millennials are much more involved in their children’s not surprising that a generation that values living close to their families as much as Millennials would somewhat more likely to live with their parents as adults, particularly in an economy that is still also be 56 . Moreover, the increased enrollment of Millennials in college as e recession recovering from a larg in Fact 4 may contribute to a rising share of Millennials living at home, as students often rely discussed 57 on their parents for housing and other financial support. 56 th As shown in Fact 3 , 49 percent of 12 grade Millennials said that living close to family and friends is very i mportant to them, a 40 percent increase over what baby boomers said at that age. (Monitoring the Future, 1976 - 2011 ) 57 Thompson (2014) and Fry (2014) argue that the increase in the share of young adults living at home with their parents stems from a classif ication issue, whereby those in college classify themselves in surveys as living at home. While these classification concerns are a contributing factor, we also find that even among 18 to 24 year - olds not enrolled in college he share living with their parents increased during the Great Recession and remains and among 25 to 34 year - olds, t elevated. 37

38 The labor ma rket is another factor contributing to the increased young adults living at home number of . The rapid decline in the unemployment rate in recent years and the concurrent decline in headship has somewhat boosted the headship rate and is putting downward pre ssure on the share living with Historically, the headship rate has had a significant cyclical component : since the 1970s, their parents. - headship rate among young adults generally tracked their employment to - population ratio has the 58 closely. This cyclical relat ionship also holds at the state level: states with the largest increases in the unemployment rate relative to their averages before the Great Recession registered the largest declines in headship rates on average. With parents helping their c hildren in times of labor market adversity, the majority of young adults living at home report that their own financial situation has 59 improved. However, the share of Millennials living at home has increased even among those with jobs, which ole for factors outside the labor market. For instance, research suggests that increases in points to a r rents across many metropolitan areas during the Great Recession are likely to have depressed 60 Moreover, headship. - the non costs of living at home may have decreased , again monetary highlighting the role of the relationship between Millennials and their parents in explaining the former’s housing choices . Today’s parents report having fewer serious arguments with their children in their late teens than they had with th eir own parents at the same age. One in parents with ten 16 to 24 children ages say they “often” argue with their kids, while almost twice as many adults over 58 Haurin et al. (1993); Whittington & Peters (1996); Ermisch & Salvo (1997); Ermisch (1999), Lee & Painter (2011); and Paciorek (2013). 59 Parker (2012). The Boom erang Generation. Kaplan (2012) shows how the option to move back home provides insurance against adverse labor market outcomes, particularly among young adults that do not attend college. 60 Paciorek (2013). More generally, higher housing costs bear a nega tive relationship with headship rates (see Haurin et al. (1993)). 38

39 61 30 report often having major arguments with their own parents. Similarly, increased interaction with A family does not appear to have a deleterious effect on the quality of Millennials’ family ties. recent survey found that Millennials living at home are just as satisfied with their family life as those who are 62 not living at home. Consistent with lower headship rates, y oung adults today are less likely to be homeowners than young adults of previous generations. The decline in homeownership among Millennials , however, only looks particularly sharp when compared to the homeownership rates of 18 to 3 4 year - olds during the ly large share of 18 to 34 year - housing boom. Not surprisingly, the housing boom attracted a particular olds relative to historical trends. Taking a longer view , the lower largely in line among Millennials today is likelihood of homeownership with longstanding declines in homeownership among young people. While d isentangling the factors contributing to contributing to the lower likelihood of owning a home in recent years is difficult , at at play First, the gradual shifts in labor force participation, increased least three forces appear to be . delayed marriage discussed earlier in this report college enrollment, and suggest that Millennials are delaying homeownership until they grow older , rather than substituting away from homeow nership altogether . Millennials’ stronger relationship with their parents and the accompanying reduction in headship reinforce this trend. It is likely for the Millennials living with their parents to first become renters before becoming homeowners, follow ing the usual path to homeownership. Second, the more recent decline in the probability of - olds is strongly homeownership for 18 to 34 year tied to the challenges in the labor market for Millennials due to the Great Recession that are discussed in Fact 9 . However, homeownership decisions are often tied to job prospects and with the labor market 61 Parker (2012). 62 Ibid. 39

40 recovery well under way for Millennials, maintaining flexibility in their location decisions as renters could provide an advantage as they consider the job opportun ities that come their way. oday’s be to blame . The share of those under age 30 with Lastly, t tight lending environment may also credit scores below 680 a lower credit score on the spectrum from 300 to 850 – is approximately 67 – , whereas this portion of the credit score distribution is less represented among older age percent . With regulatory constraints leading lenders to apply additional credit overlays for those with groups credit scores, Millennials are likely to face challenges obtaining mortg age credit. Survey evidence low collected by the Federal Reserve Bank of New York suggests that about 22 percent of borrowers with scores below 680 apply for mortgage credit in the first place , perhaps because they may decide not to feel discouraged by a prior rejected credit application, the lending environment , their employment 63 the financial burdens of paying down other debt . prospects, or It is worth mentioning that some observers suggest that rising student loan debt burdens are dimming 64 homeownership For many reasons, including the fact that the ir returns to prospects for Millennials. education are still to be realized, it is too soon to draw firm conclusions about the long lasting effects - of the increase in aggregate student loan debt on homeownership. Several considerations suggest that the effect is likely to be concentra ted in a small minority of Millennials who have student loan debt and are considering buying a home today. For one, because the presence of student loan debt generally “thickens” a credit record , providing more information about a person’s payment history, and thus increases credit scores, the vast majority of those who are able to manage their payments and pay their loans on time preserve their access to credit, and many may even see their credit scores it have been steady in recent years, suggesting improve. Moreover, delinquencies on all types of cred that, for some, the negative effect of missed student loan payments is somewhat offset by making 65 consistent payments on their credit cards or auto loans. Consistent with the fact that overall 63 Zafar, Livingston, and van der Klaauw (2014). 64 Brown, Caldwell, and Sutherland (2014). See Akers (2014) for an alternative view. 65 Federal Reserve Bank of New York, Consumer Credit Panel (2014) and Dettling and Hsu (2014). 40

41 delinquencies h ave not been increasing in recent years, average credit scores among young adults have remained relatively constant. Lastly, research suggests that the extent to which higher student loan indebtedness is crowding out saving for a down payment appears to be modest so far, in part due to the higher returns to education facilitated by borrowing for college. 41

42 Fact 1 : College - educated Millennials have moved into urban areas faster 5 than their less educated peers. 66 has seen a resurgence during Millennials’ lifetimes. Urban living in the In keeping with United States , Millennials are more likely to live in urban areas than earlier generations were at similar this trend 67 Growth in t he share of 25 to 34 ages. year - olds living in cities has been largest among mid - sized th th to 90 metropolitan areas (defined here as 6 largest metro areas ) . These mid - size cities have the attracted both college and non - college educated Millennials and have seen growth of around 5 from percentage points in the share of the young adult population living in them today 30 years ago. population generally This is in keeping with long - term trends among the U.S. , as the American population as a whole from non - metropolitan areas towards mid - sized cities over the same has moved - year period . 30 , albeit to a lesser extent The move toward cities has been greater among the college educated , who have increased their - sized cities. Overall, 73 percent of 25 to 34 likelihood of living in both large and mid - old s with a year 68 were living in large or mid - sized cities in 2011, compared to 6 education percent in 1980. college 7 Among those without a college degree, 61 percent were living in large or mid - sized cities compared to 58 percent in 1980 , and the growth in the share living in cities has only occurred in mid - sized cities. College - educated Millennials are also somewhat more likely to live in a coastal city than their less - 69 metro Americans overall are mor e likely to live in educated peers or Americans in general. politan 66 Glaeser and Gottlieb (2006). 67 Taylor and Keeter (2010). 68 Changes to the coding of metro area residence in 2012 make it difficult to compare 1980 residence patt erns with the most recent years of data. 69 American Community Survey; CEA calculations. 42

43 areas away from the Atlantic or Pacific Coasts , 25 to 34 than they were in previous years. However more likely to be found in a metro - in 2011 w ith a college education were slightly politan area year olds 70 were around 30 years ago (3 on the East or West Coast than percent v ersus 3 1 percent ). they F or 3 those without a college degree , the proportion living on the coasts declined slightly over the same 71 to from 25 percent 24 percent). period ( Research in rece found that Americans with different levels of education are increasingly nt years has . Berry and Glaeser (2005) note that since 1980, college graduates have living in different areas d towards urban areas that had higher levels of educational atta inment gravitate at the beginning of this period , leading to increasing segregation by skill level across cities. Both Moretti (2013) and Diamond (2013) find that this geographic divergence has been partially driven by the demand for differently - skilled labor across cities. They also find that the divergence in skill levels across cities has been accompanied by diverging economic trajectories for “high skilled” and “low - skilled” cities, - suggesting that Millennials’ increased sorting by skill has implications for econ omic opportunity. 70 Ibid. 71 Ibid. 43

44 Conclusion shifting ways of The Millennial generation has taken part in many important transformations: from communicating and using technology, to changes in parenting practices, educational and career and choices, shifts in homeownership and family life. These developments have inspired much speculation about how this generation will fare later on in life and whether these trends are temporary or permanent. The answer to this question will depend, in part, on the p olicy choices we make in specific areas like education and housing and technology as well as the broader economic policies that help foster job creation and wage growth. First, Millennials are a technologically connected, diverse, and tolerant generation. The priority that Millennials place on creativity and innovation augurs well for future economic growth, while their unprecedented enthusiasm for technology has the potential to bring change to traditional economic . For example, “crowdfunding” has enabled entrepreneurs to institutions as well as the labor market raise capital from diffuse sources online, rather than relying on traditional sources like banks to grow 72 their businesses. Second, both Millennials’ parents and Millennials themselves have made substantial investments in their human capital. Many of these trends are economically reasonable responses that will likely pay off for many Millennials over the long - term. For example, increasing college enrollment is a rational response to structural and cyclical trends: respectively, a labor market that confers ever large rewards on educated workers, and a weak job market which greatly reduced the opportunity cost of schooling p growing as long during the downturn. Even as the economy improves, we expect enrollment to kee as college remains a worthwhile investment, albeit not as quickly as it had before. Moreover, Millennials are more likely than previous generations to study social science or applied fields that correspond to specific career paths. Finally, as a result of the Affordable Care Act, Millennials are much more likely to have health insurance Since the Affordable Care Act’s dependent coverage coverage than young workers in the past. provision went into effect in 2010, the uninsurance rate among Millennials has fallen by 13.2 percentage points. Increased health insurance coverage will likely translate into improved access to health care, health outcomes, and financial security. It may also have important labor market benefits: because the Af fordable Care Act has made it easier for individuals to purchase their own health insurance, young adults are now better able to choose a job that fits their career goals, without having to worry about access to health insurance coverage. That being said, challenges remain . First, research finds that macroeconomic conditions in childhood and young adulthood shape individuals’ trajectories for years to come and can have lasting impacts on trust in institutions among these individuals . wages, earnings, savings and investment patterns, and This suggests that the Great Recession will at least affect Millennials’ labor market performance as well as savings and investment behavior in the short - term, though at this point, it is still too soon to kn ow how large and lasting these impacts will be. 72 Hemer (2011); Agrawal, Catalini, and Goldfarb (2013). 44

45 Second, Millennials face a different labor market than previous generations , characterized by longer job tenure, fewer employer switches and career transitions, and lower overall fluidity. As a result, Millen nials have stayed with their employers longer than Generation X workers did at the same point in their careers. At the moment however, the long - term impac ts of these changes are unclear and there are both benefits and costs to longer tenure at jobs. Third , total outstanding student loan debt has now surpassed $1 trillion in the second quarter of 2014, even as del and there has been a recent increase in student debt delinquency rates rates on inquency other types of debt have come down as the economy has rec overed . In part, the growth of student loan debt is due to greater college enrollment among Millennials, but it is also due to a changing composition of students, rising tuition, reduced public funding, and diminished home equity. These ns that some borrowers — particularly those who do not graduate from four - year trends raise concer institutions and those attending lower quality for - profit institutions — might face financial difficulties managing and paying down their debt. There are also concerns that students at these institutions might be receiving lower returns to their education. Fourth, Millennials are less likely to own a home than previous generations. Homeownership trends have a significant cyclical component, as the household formation rate has histo rically closely tracked overall employment trends. The tight credit market has also made it more difficult to procure a Nevertheless, longer mortgage. - standing trends — liked getting married later — will continue to affect homeownership by this generation even after the economy has fully recovered. Finally, in addition to these economic trends, Millennials are driving social and geographic shifts. marrying later and less often than previous generations, while marriage rates have Millennials are fallen especial ly sharply among the less - educated. In addition, Millennials — especially the more — educated among them have moved in large numbers to urban areas . These could have important economic implications for a long time to come because both marriage and geographic location have 73 significant relationships with economic mobility and opportunity. So, while there are substantial challenges to meet, no generation has been better equipped to They a re skilled with technology, determined, diverse, and more overcome them than Millennials. educated than any previous generation. Millennials are still in the early stages of joining and participating in the labor market. Taking steps to help them access and complete college, manage their student debt, have better opportunities for training and connection to jobs, access the credit they need for a home, protect the network neutrality that is the basis for much of their technological activity, as well as general policies to strengthen inves tment, job creation and wage growth, all have the potential to have a lasting impact for this generation and thus for U.S. economic performance for decades to come. 73 Chetty, Hendren, Kline, and Saez (2014). 45

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