As the presidential election and socioeconomic circumstances, like the wealth gap between people of color and white Americans, cast conversations about race to the forefront, it’s interesting to note how the complexion of the country is literally changing, and the impact that will have on the economy.
According to a Brookings Institute report citing data from the Census Bureau, minorities make up more than half of the millennial populations in 10 states, including Texas, Arizona, Florida, Georgia, and New Jersey. The data also shows that in in 10 additional states, including New York, Illinois, Virginia, North and South Carolina, minorities comprise more than 40% of millennial residents.
“Racial diversity will be the most defining and impactful characteristic of the millennial generation,” says William Frey, Senior Fellow of the Metropolitan Policy Program at the Brookings Institute.“Plainly, the millennial generation is ushering in the nation’s broader racial diversity,” he adds.
Change is Coming
It’s not just the millennial generation. Frey also points out that the youngest Americans, those younger than five-years-old, became majority-minority for the first time, with 50.2% being part of a minority race or ethnic group.
“This began to occur between 2000 and 2010 and continued between 2010 and 2015. More white children are aging past 18 than are being born or immigrating. Although white fertility is low, it is the aging of the white population, with proportionately fewer women in their childbearing years, that is leading to a projected long-term continuation of this trend,” he says.
While it’s difficult to predict the financial patterns five-year-olds will develop and how society will impact their attitudes about money, we will all ultimately feel the impact of the unique financial behaviors millennials have developed.
Coming of age during a terrible recession, a bad job market, and the burden of unprecedented amounts of student loan debt has made this generation financially and emotionally unable to spend in ways that their parents and grandparents did on big ticket items that helped keep the economy humming.
“These days, many millennials are deliberately ‘traveling light’ financially—by choosing not to own a car or by delaying buying their own home, for example,” says Carla Dearing, CEO of SUM180, an online financial planning service created by women for women.
The realities of the economy they’ve inherited have also made them good savers. A study by Bankrate.com found that 62% surveyed millennials are saving more than 5% of their incomes, which is up from 42% last year, while just 50% of older adults (ages 30 and up) are saving more than 5% of their pay.
In addition to bringing their generational values to the financial playing field, millennial and younger generations will bring a wealth of diversity to table that is bound to change the world and the economy as we know it.
Yes, millennials are worthy of attention. They are smart. They are creative. They are passionate about many issues. But the most defining characteristic of the members of this unique generation, is their racial diversity as the country evolves demographically.