Rethinking Millennials and Generations Beyond

By Kurt Cagle  |  September 26, 2018  |  Source: CogWorld on FORBES

In 1991, authors and sociologists William Strauss and Neil Howe published Generations (updated in 1997 with The Fourth Turning) where they argued the idea of Generational Theory — the notion that there were distinct cohorts throughout history that shared characteristics and values. These cohorts, going through different phases of their life, determined turnings that identified pivotal periods in history, with cohorts having a cycle of 18-20 years, and turnings taking place over an 80-year cycle.

One of the central tenets of Generational Theory is actually a sound one — that there is a correlation between birth rate (the number of native births per family) and the economy. Up until the twentieth century in the US, this correlation was driven by agrarian concerns: in good times, you needed kids working in the fields to increase the family's fortunes, so families tended to be large. In bad times, extra mouths became a liability. However, by the 1930s, this pattern changed due to the rise in urban populations, where the cost of raising children was significantly higher but infant mortality declined dramatically. This shift, even with the Depression and World War II, would make the Baby Boom generation the largest to date in history in absolute terms, and remarkable even in relative terms.

About 1954, the Baby Boom peaked in terms of birth rate, and it then began a slide that would take it back to a level comparable to that of the  early Depression era. Several factors were involved with that, with the introduction of the birth control pill in 1960 competing with urbanization reducing the upper number of children a family had. Note that the birth rates were still positive — the population itself has been continuously growing since the 1930s with death rates remaining mostly stable, so birth rates act a lot like compound interest. However, in 1971, the native birth rate fell below the 2.1 children per family that demographers consider replacement rates, the rate at which a population starts to shrink. This means that most of the growth in the US population since 1971 has been due to immigration, and that without that immigration, the US population would be declining now, according to data gleaned from Google Public Data.

Economic growth is a direct function of population growth. Total economic activity is due primarily to the number of financial transactions that take place (not necessarily the magnitude of those transactions), which increases with more participants up to a limit imposed by the velocity of money in the system. As population growth slows (which happens when the birth rate is below 2.1), the number of transactions also slow, and money has to move faster through the system in order to compensate (e.g., wages need to increase).

A chart showing various generations

Strauss & Howe, GatePost and Inflection Point GenerationsKurt Cagle

Changing Minds without Twisting Arms

When Strauss & Howe laid out their theory, they went on the assumption that generations were symmetrical, so that if you measured a generation from midpoint to midpoint, you would get a representative sample of people with related interests (which was also indicative of the pattern they had seen in earlier population data, which was distinctly sine-wave in shape). However, because of that, the endpoints between generations (the red vertical lines in the above diagram) don't seem to line up with anything significant. Shift it by a quarter cycle (9 years), and something interesting emerges. The green lines are the shifted (GatePost) "generations" while the blue lines indicate inflection points in the population, where macro-behavior changes significantly. The green and blue lines overlap enough to suggest that there are definite regimes of behavior.

I refer to this shift as inflection point (IP) generations, and rather than trying to view generations as "half-cycles", I argue here that these inflection points make a much more natural generational division that what Strauss and Howe established originally (and in the process hope to cut down on a lot of the more tenuous "turnings" associations that has long been a valid criticism of the generational approach.

So, to summarize, an Inflection Point Generation occurs when there is a clear behavioral trend change, typically a peak or trough point, in the birth rate. These correspond (very roughly) with the mid-points of the S&H generations, so one effect of this is to, on average, shift the age upwards of each generation by approximately nine years. The Boomers, as an example, go from 1946-1964 to 1936-1957. While this serves to place the goalposts at the beginning and end, rather than at the midpoint, it  also makes these dates consistent with broader economic, rather than just social trends.

The rationale behind this is that there is a strong correlation between birth rate and economic activity. When economic activity is rising, people begin to feel more optimistic, and tend to have larger families. When economic activity is falling, people begin to feel less optimistic, and tend to have smaller families. Note that this is trend that really only applies to industrial and post-industrial societies, and the one notable trend that kicked off the boomers was a transition in the US from a primarily agrarian to a primarily industrial economy during the 1930s.

In many respects, the idea of generations provides a useful way for assessing economic trends over the next twenty years. 2018 is actually a good point for examining these, as it (nominally) marks the end of one generation (GenZ) and the start of the next (GenAA?). Each group consequently has the following impacts (table scrolls left & right):


Generation

Interval
(S&H) / Average
Age

Interval
(IP) / Average Age

Population Percentage
2017 IP

Economic Impacts 2018

The Greatest Generation

1907-1925 /
100

1898-1916
109

< 0.1%

Minimal current impact upon the economy, save in health care costs

Silent Generation

1926-1944 /
82

1917-1935 /
92

3%

Healthcare costs predominate. Like GenXers, a small generation. Mostly fixed income retirees. Inflection point  (IP) adjusted, this group is even smaller, and made up bulk of World War II generation.

 

The Baby Boomers

1945-1963 /
64

1936-1956
72

25%

IP adjusted, the Boomers were witness to the biggest growth period in US history. The Boomers are mostly well into retirement age at this point. This means that they are now drawing on fixed income portfolios or social security, are downsizing (and mostly have done so) and are reducing their spending.

GenX

1964-1982 /
45

1957-1975 /
53

21%

IP Adjusted, GenXers were the disco generation. The economy ran in reverse for the GenXers, and, in general, they were overshadowed by the Boomers over most of their lives. GenXers largely ended up going into technical fields, and were more introverted and pragmatic than their parents. They more or less created the PC, networking and the infrastructure of the Internet. Because they are a smaller generation, GenXers overall will have a smaller presence in the economy, leading to weakening growth.

Millennials
(GenY)

1983-2000 /
26

1976-1990 /
35

22%

IP Adjusted, the Millennials created the World Wide Web and the Mobile Web on top of the Internet. Their generation is actually just a bit larger than GenX, and came of age during a period of mild economic growth.

GenZ

2000-2018 /
9

1991-2008 /
18

26%

When people talk of Millennials as kids, they are probably actually thinking of IP adjusted GenZ. This was a group that grew up with the Internet, and for the most part they are most adept at using it as social media and are easily the most media savvy. Culturally Millennials and GenZ are fairly distinct. It is also a group that is as large as the Boomers, and likely will have a dominant role in culture moving forward.

GenAA

2018- /
0

2009- /
9

13%

In 2008, the housing crisis occurred, and the birth rate began to fall significantly for the first time since the GenXers. GenAA is still something of a guess, but given the persistence of the trend it is likely that we are seeing a new generation here. This birthrate is still falling, and should it continue this trend, it will hit "bottom" around 1.5 births per family around 2025. This is already affecting elementary and secondary school districts in a way that should be familiar to any student of the 1960s, where expansive school districts consolidated. GenAA will likely end up having a significant  impact upon the economy around 2045 or so.


In 2008, the housing crisis occurred, and the birth rate began to fall significantly for the first time since the GenXers. GenAA is still something of a guess, but given the persistence of the trend it is likely that we are seeing a new generation here. This birthrate is still falling, and should it continue this trend, it will hit "bottom" around 1.5 births per family around 2025. This is already affecting elementary and secondary school districts in a way that should be familiar to any student of the 1960s, where expansive school districts consolidated. GenAA will likely end up having a significant  impact upon the economy around 2045 or so.

This table actually helps explain a number of anomalies in Strauss & Howe's generations. For instance, music culture experienced its greatest renaissance when young singers (mostly raised initially in rural settings) became heavily known in the late 1950s and through the 60s, but those singers were in general in their twenties, not their teens, when they began performing and making it big. Buddy Holly was born in 1936, Presley in 1935, and they represent the start of the "rock and roll" era. This puts them at the start of the IP Boomer generation. This generation grew up with television, but it didn't enter the average home until the early 1950s — when an S&H boomer would have been five, but an IP Boomer would have been in her mid teens (which squares with the historical record).

From my own perspective, as someone born in 1963, I do not have values in accordance with Boomers, but am squarely in the IP GenX camp - and most of my acquaintances that are within a few years of this age clearly have different values than the Boomers. The Baby Boomers in general are much more inclined to be fairly religious, something very much in keeping with having grown up in a rural or semi-rural environment, while GenXers are much less religious, and something that would be expected from growing up in an urban or suburban environment.

On a similar thread, one thing that has long bothered me about S&H is that the Millennial generation seemed both extraordinary long and remarkably uniform, like there was a Millennium I and Millennium II generation. However, by looking at inflection points, it became clear that there was a distinct generation that spanned the period from 1976 to 1990. The oldest of this generation would have entered the workforce in the early 1990s and would have built much of the World Wide Web, while the youngest would have been involved in building mobile phones, probably as junior programmers to their GenX managers.

By the time GenZ came along, they would have been raised as children on computer CDs, would have learned to navigate social media from AOL and later Facebook, Twitter and Instagram, and would have learned social interactions with cell phones mediating their conversation. When was the last time you saw a GenZ kid actually knock on a door, rather than text their friend inside? This is a generation that has taken to streaming like ducks to water.

This shift upwards in age of the various generations has a number of interesting implications. First, it provides a hard definition for a generation, one based not on current events but on clear demographic markers. It gets rid of pesky labels like Boomers or Millennials, making it harder to ascribe behaviors that are broad age-centric generalizations at best. It also relies upon a fairly stark designator: "Are you comfortable enough about your future that you are willing or even able to raise a large family?"

By going to an inflection point measure, it also makes it easier for marketing campaigns that specifically target based upon demographics what is likely a more natural benchmark. If the average IP Boomer is seventy-two, not sixty-four, they will have less interest in retirement planning and more interest in vacations. Your typical IP Millennial is no longer living at their parent's house and is likely entering mid-level management now. Your IP GenZ daughter is motivated, politically aware and may be able to vote. Your IP GenAA granddaughter is more likely into the latest iteration of My Little Ponies and Marvel movies than she is in teething rings and blankies, but still loves her GenX grandpa and grandma.

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