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Generation Z and Their Role in the Economy

January 17, 2020

In this week's episode, we discuss Generation Z and their emerging role in the workforce and economy.

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ITR Economics' Divider

Transcript by Rev

Connor Lokar:
Hello and welcome to our latest TrendsTalk here at ITR Economics. I'm Connor Lokar, an economist here on the team and today with the new year, we're talking about a new generation. We're talking about who is Generation Z. Now this has come up as during the 2010s it seemed like millennials were seemingly at the center of every discussion involving demographic groups. But with the new decade, just early on here in the year, new decade, new year, it appears that there's a new demographic group that's creeping into the forefront of public discourse and that is Generation Z.

Now, I'm sure that millennials, I am a millennial myself, I'm sure millennial's time in the demographic limelight is not over necessarily, probably not even close. It's far too fun to blame us for everything and make fun of us. But early questions for our clients at presentations this year and in webinars here in 2020 have indicated a bit of an increased appetite for content and information regarding Generation Z.

So let's just start with who this generation is and not necessarily the who and what, but the when, as far as when this generation is born. So one of the hardest things to do with generations, particularly when we're making comparisons between generations, is setting the goalpost as far as when do they end and when do they begin? There can contend to be quite a bit of variation in that from source to source depending on who's polling, who's talking about it and that can often lead to flat out conflicting information and statistics in terms of head count, average incomes, buying power, savings, etc.

So for me personally for information on demographic groups, I've always turned to the folks at Pew Research Center. They're a nonpartisan fact tank, which is certainly something being apolitical here at ITR that we appreciate. They're based down in DC and they conduct extensive public opinion polling, demographic research among other things, and obviously given our data-driven focus here at ITR, we've found that they have the deepest set of polling data that we can actually try to tie some of our notions and broad brush thinking back to empirical evidence in terms of generational thinking. So I'm a fan.

Now Pew defines Generation Z as being born from 1997 through 2012, meaning that the oldest Generations Zers would be 22 going on 23 here as we open up the year 2020. Now some for example have called Generation Z just anyone, anyone born after 1996 and said it's the largest generation ever, which doesn't really make sense because from '96 on that would be 23 years plus and counting compared to typically 16 to 19 years for other generations. The Baby Boomer Generation at 19 years where Generation X typically defined at 16 years, millennials at 16 years. So that doesn't really make sense. So I think the 1997 through 2012 is a rather appropriate start and end point for Generation Z.

Now that would certainly make Gen Z very young still, obviously the youngest at eight and then the oldest at 22, 23 and I guess given the timing, it's supposed to make sense that they're starting to pop up on the radar of folks that we talk to in our presentations on the road as they're officially entering the workforce en mass in greater numbers. Again, assuming that typical four year degree, 21, 22 so in the last couple of years they've really been trickling into the workforce and Google trends. Some researchers showing skyrocketing search volume for Generations Z since 2018 so they clearly are at the top of mind.

Now the reality is, while Gen Zs are gaining more in popularity, they're really just getting started. As I said, the oldest Gen Zer, they would've been just starting high school during the very end of the great recession. So perhaps they'll turn out less, maybe economically jaded than millennials are, less disenchanted with the American capitalist system. Maybe they will learn from my generation's proclivity to take on massive student loan debt. Those that are opening their careers right now there at the front edge of Generation Z, they're going into a labor market with nearly 7 million job openings, not during a great recession as many of my millennial cohorts. Hundreds of thousands of which are available in the trades and manufacturing.

I actually talked to a gentleman last week after one of my presentations. He said he coaches Alpine skiing for high school kids and he said a surprisingly high number of kids on the team are considering a trade school, not that conventional four year degree so maybe they're paying attention. But ultimately, first year at ITR, Gen Z just isn't all that relevant yet, not in terms of our forecasting for the next few years. Collectively they just aren't viable in terms of purchasing power. Their value as a tax base is just emerging as workers, even voters, so they're just not that relevant yet.

By 2030 and that coming great depression a decade from now that we've been calling for here at ITR, they'll certainly have a part to play and we'll keep an eye on that as we get closer. But I think for now as a millennial, I'm looking forward to a new generation being on the hot seat to be made fun of, bashed and blamed. I'll probably even join it. I'm Connor Lokar. Thanks for joining me.

 

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