15 ECONOMIC FACTS ABOUT 

MILLENNIALS

The Council of Economic Advisers

October 2014
2

Contents

Introduction ....................................................................................................................................................... 3

Fact 1: Millennials are now the largest, most diverse generation in the U.S. population................................. 5

Fact 2: Millennials have been shaped by technology. ....................................................................................... 7

Fact 3: Millennials value community, family, and creativity in their work........................................................ 9

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 

coverage during their young adult years. ........................................................................................................ 20

Fact 9: Millennials will contend with the effects of starting their careers during a historic downturn for years 

to come. ........................................................................................................................................................... 23

Fact 10: Investments in human capital are likely to have a substantial payoff for Millennials....................... 27

Fact 11: Working Millennials are staying with their early-career employers longer....................................... 29

Fact 12: Millennial women have more labor market equality than previous generations ............................. 31

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
3

Introduction

Millennials, the cohort of Americans born between 1980 and the mid-2000s, are the largest generation 

in the U.S., representing one-third of the total U.S. population in 2013.

1 With the first cohort of 

Millennials only in their early thirties, most members of this generation are at the beginning of their 

careers and so will be an important engine of the economy in the decades to come. 

The significance of Millennials extends beyond their numbers. This is the first generation to have had 

access to the Internet during their formative years. Millennials also stand out because they are the 

most diverse and educated generation to date: 42 percent identify with a race or ethnicity other than 

non-Hispanic white, around twice the share of the Baby Boomer generation when they were the same 

age.2 About 61 percent of adult Millennials have attended college, whereas only 46 percent of the Baby 

Boomers did so.

3

Yet perhaps the most important marker for Millennials is that many of them have come of age during 

a very difficult time in our economy, as the oldest Millennials were just 27 years old when the recession 

began in December 2007. As unemployment surged from 2007 to 2009, many Millennials struggled to 

find a hold in the labor market. They made important decisions about their educational and career 

paths, including whether and where to attend college, during a time of great economic uncertainty.

Their early adult lives have been shaped by the experience of establishing their careers at a time when

economic opportunities are relatively scarce. Today, although the economy is well into its recovery, 

the recession still affects lives of Millennials and will likely continue to do so for years to come. 

This report takes an early look at this generation’s adult lives so far, including how they are faring in 

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 practices and 

schooling choices, to the condition of the U.S. economy they entered, to their own choices about home 

and family. However, in many cases, Millennials are simply following the patterns of change that began

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 

challenges their generation faces. This includes policies such as: making student loan payments more 

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 

training and skills programs that prepare them for in-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 American Community Survey. Data for Millennials are for those 15 to 34 years old in 2012. Baby 

Boomers comparisons are for when they were 15 to 34 as surveyed in 1980.

3 Decennial Census and American Community Survey. Data for Millennials are for those 18 to 34 years old in 2012. Baby 

Boomers comparisons are for when they were 18 to 34 as surveyed in 1980.
4

President will continue to act with Congress and on his own where he can to build on this progress to 

expand opportunity for Millennials and all Americans.
5

Fact 1: Millennials are now the largest, most diverse generation in the U.S.

population.

Millennials now represent the largest generation in the United States, comprising roughly one-third of 

the total population in 2013. What’s more, the largest Millennial one-year age cohort is now only 23. 

This means that the Millennial generation will continue to be a sizable part of the population for many 

years (Figure 1).

Aside from their numbers, Millennials’ diversity sets them apart from other generations. Many

Millennials are immigrants or the children of immigrants who arrived in the United States as part of an 

upsurge in immigration that began in the 1940s. The share of people age 20 to 34 who were born in a 

foreign country is now around 15 percent – much higher than it was in 1950 and near the peak of 

almost 20 percent seen in 1910 during the last great wave of immigration to the United States (Figure

2). 

0

1

2

3

4

5

1 6 11 16 21 26 31 36 41 46 51 56 61 66 71 76

Millions

Baby Boomers

(1946-1964)

Silent 

Generation

(1928-1945)

Generation X

(1965-1980)

Millennials*

(1980-2004)

Homeland 

Generation

(2005-Present)

Source: Census Bureau.

Age

Figure 1: US Population Distribution by Age, 2013
6

This influx has contributed to the large size of the Millennial generation and helped make it the most 

diverse generation in the post-war period. As Figure 3 shows, the share of those age 15 to 34 who 

identify as non-Hispanic white fell 20 percentage points from 1980 to 2012, while the share reporting 

Hispanic ancestry tripled.

0

5

10

15

20

25

1900 1915 1930 1945 1960 1975 1990 2005

2012

Percent

Figure 2: Share of Population Aged 20 to 34 

that is Foreign-Born

Source: Decennial Censuses and American Community Survey; CEA calculations.
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 

innovated at startling speed, often rolling out a groundbreaking new platform or computer model 

every year. Because much of this period of innovation coincided with Millennials’ childhoods, it has 

shaped the ways that Millennials interact with technology and seems to have affected their 

expectations for creativity and innovation in their own work lives.

Millennials are more connected to technology than previous generations and a quarter of Millennials

believe that their relationship to technology is what makes their generation unique.4 While all 

generations have experienced technological advances, the sheer amount of computational power and 

access to information that Millennials have had at their fingertips since grade-school is unparalleled. 

Computational processing power has roughly doubled every 2 years, and storage prices continue to 

drop.5In 1980, IBM’s first gigabyte hard drive weighed 550 pounds and cost $40,000.6 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 

frontiers of technology have appeared unlimited.7

At the same time, the costs of creating and distributing all kinds of digital content – from books to 

music to software – have fallen dramatically.8 This creates opportunities 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 Millennials 

became well-known entrepreneurs in their 20s, this generation is just beginning to reach the peak age 

for entrepreneurship, which generally occurs in one’s 40s or early 50s.9

In addition to creating opportunities for entrepreneurship, advances in computer processing power, 

along with widespread access to cell phones and the Internet, have changed how Millennials 

communicate and interact with one another. Millennials use social media more frequently and are 

even more likely to sleep near their cell phone.10 Three-quarters of Millennials have an account on a 

social networking site, compared with only half of Generation Xers and less than a third of the Baby 

Boomers.11 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 Waldfogel (2013); MIT App Inventor, http://appinventor.mit.edu/explore/

6 PCWorld, Timeline: 50 Years of Hard Drives, http://www.pcworld.com/article/127105/article.html

7 Berkeley DataScience, http://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.
8

parents, and that some Millennials use texting or online chat to have running conversations with their 

parents throughout their day.12

 

12

“Mom, Stop Calling, I'll Text You All Day” Wall Street Journal July 30, 2013 

http://online.wsj.com/news/articles/SB10001424127887324354704578636391784495074
9

Fact 3: Millennials value community, family, and creativity in their work. 

Millennials are not just virtually connected via social networks; they value the role that they play in 

their communities. For instance, high school seniors today are more likely than previous generations 

to state that making a contribution to society is very important to them and that they want to be 

leaders in their communities. This community-mindedness also includes a strong connection to family. 

Millennials have close relationships with their parents, and as high school students, roughly half say 

that it is important to them to live close to their friends and family, compared with 29 percent of Baby 

Boomers and 40 percent of Generation Xers.

13

A 1997 Gallup survey found that 9 in 10 children (a population comprised entirely of Millennials that 

year) reported high levels of closeness with their parents and were personally happy with that 

relationship.14 Their tight relationship with their parents extends to work, where some companies 

report establishing relationships with parents of their Millennial employees.

15 The Millennials’ close 

relationships with their parents might be related to the greater time they spent with their parents 

growing up. According to Pew (2014), hours spent parenting have increased for both fathers and 

mothers, tripling for fathers since 1985 and increasing by 60 percent for mothers, as shown in Table 

2.

16 Ramey and Ramey (2010) show that these increases have been particularly pronounced among 

college-educated parents, with 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 

only over 4 hours per week.

17

 

13 Monitoring the Future (1976-2011).

14Howe and Strauss (2000). 

15 Harvard Business Review http://blogs.hbr.org/2014/04/do-millennials-really-want-their-bosses-to-call-their-parents/

16 Pew (2014).

17 Ramey and Ramey (2010).

0

20

40

60

80

100

Time for

recreation

Contribution

to society

Children

better off

Live close to

friends and

family

Find new

ways to

experience

things

Baby Boomers Generation X Millennials

Figure 4: Percent Reporting Life Goals as Being 

"Quite or Extremely Important" 

Source: Monitoring the Future, 1976-2011; CEA calculations.

Percent
10

When it comes to work, Millennials are mostly similar to previous generations: they want to be 

successful, and they want the type of prosperity that means that their children will be better off. They 

are somewhat more likely than previous generations to report that they consider creativity to be a

very important job feature. Perhaps this is no surprise for a highly-connected generation for whom 

technology was a key part of their upbringing. On the other hand, they are less likely to report that 

having an interesting job, or one where they can see results or have advancement opportunities, is 

very important.

While many Millennials report that earnings are very important to them in a job, breaking the data 

down by gender reveals that this change is driven primarily by young women. Each cohort of young 

women is more likely than the last to name earnings as a key job feature, while the importance of 

Year Fathers Mothers

1965 2.5 10.2

1975 2.6 8.6

1985 2.6 8.4

1995 4.2 9.6

2000 6.8 12.6

2005 6.8 13.6

2010 7.3 13.5

2011 7.3 13.5

Table 1

Average Number of Hours 

Source: American Time Use, Pew Research 

Center analysis, 

http://www.pewresearch.org/datatrend/society-and-demographics/parentaltime-use/

0

10

20

30

40

50

60

70

80

90

100

See Results Interesting Advancement Earnings Creative

Baby Boomers Generation X Millennials

Figure 5: "Very Important" Job Characteristics 

Among High School Seniors

Percent

Source: Monitoring the Future, 1976-2011; CEA calculations.
11

earnings has been stable for men. The result is that Millennial women have aspirations that are similar 

to their male peers.

In 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

make a positive social impact on their own children and communities, as well as on society as a whole.
12

Fact 4: Millennials have invested in human capital more than previous 

generations.

More Millennials have a college degree than any other generation of young adults. In 2013, 47 percent 

of 25 to 34 year-olds received a postsecondary degree (associates, bachelor’s, or graduate degree) and 

an additional 18 percent had completed some postsecondary education, as Figure 6 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.

Increasing college enrollment is in part a response to decades of rising returns to education for workers

and heightened income inequality between the college-educated and the less-educated. Millennials’ 

commitment to higher education is therefore a rational response to a labor market that confers large 

rewards on more educated workers. Moreover, during recessions, young people tend to enroll in 

school in greater numbers and also tend to stay in school longer.18 This cyclical pattern reflects both a 

lower opportunity cost of schooling, as well as a stronger incentive to make one’s skills competitive in 

a tough job market.

Millennials are also more likely to attend graduate school than previous generations. Among 18 to 34 

year-olds, college enrollment stood at 19 percent in 2010, up from 15 percent in 1995. Graduate school 

enrollment for the same age 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.

With so many Millennials enrolling in college, there has been an unprecedented expansion of higher 

education to lower-income and underrepresented minority students. Figure 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. 

0

5

10

15

20

25

30

35

40

45

50

1992 1996 2000 2004 2008 2012

Figure 6: People Ages 25 to 34 By Educational Attainment, 

Percent

Source: Current Population Survey; CEA calculations.

Postsecondary education (degree)

Postsecondary education (no degree)

2014
13

of all students in degree-granting institutions has increased over time, but more recent gains have 

been greatest among black and Hispanic students. Since 1995, enrollment for blacks ages 18 to 24 

increased 9 percentage points and enrollment for Hispanics ages 18 to 24 increased 17 percentage 

points. These represent larger increases, in percentage terms, for blacks and Hispanics than for whites.

Research has also found that enrollment of students from low-income families is higher among 

Millennials than previous generations.

19

 

19 Bailey and Dynarski (2011).
14

Fact 5: College-going Millennials are more likely to study social science and 

applied fields.

Millennials are more likely to study social science or applied fields—like communications, criminal 

justice, and library science—that do not fit into traditional liberal arts curricula, but correspond more 

directly to specific careers (Figure 8). 

There has also been a significant decline in the share of students majoring in education since Baby 

Boomers were in college, as shown in Figure 8. This decrease is mostly explained by a sharp move away 

from education degrees among female college students. About 35 percent of women graduating from 

college in the early 1970s earned a degree in an education-related field, but only about 12 percent did 

in 2011. Business degrees have become more popular among women over the same period, increasing 

from 9 percent of the class of 1970 to 16 percent of the class of 2011, after peaking in the mid-1980s

for both men and women.

Millennials are also somewhat less likely than previous generations to major in fields like business and 

health (which includes pre-med and nursing). The share of Millennials studying STEM fields is slightly

lower than that of past generations; however, the absolute number of majors in these fields has 

increased over time as college enrollment has expanded, just not as fast as the number of students in 

other majors.

20

Perhaps surprisingly for a technologically-connected generation, the share of Millennials choosing

computer and information science majors has fallen over time, and this decline has been most 

pronounced among women. In 1987, 2.9 percent of women graduating with a bachelor’s degree 

received a degree in computer and information science, and women comprised 36 percent of all 

computer science graduates. In contrast, in the class of 2011, only 1.1 percent of women graduated 

 

20 Digest of Education Statistics.. 

0

5

10

15

20

25

Figure 8: Major Field of Study, by Generation

Baby Boomers Generation X Millennials

Source: American Community Survey, 2009-2012; CEA calculations.

Note: Millennials: born 1980 or later, Gen X: born 1965-79, Baby Boomers: born 1946-64. The 

"applied" category includes communications, library science, criminial justice, culinary arts, 

and similar fields.

Percent
15

with computer science degrees, 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 to 5.4 percent. This trend in computer science stands in stark contrast with other highlycompensated fields, such as medicine, dentistry, and law, where women’s participation has increased 

over this period.21

 

21 CEA (2014b).
16

Fact 6: As college enrollments grow, more students rely on loans to pay for 

post-secondary education.

Total student outstanding loan debt surpassed $1 trillion by the end of the second quarter of 2014,

making it the second largest category of household debt. In part, this increase in the aggregate level 

of outstanding student debt is due to greater enrollment among Millennials and to the changing 

composition of students, including a larger share of students from lower-income families who need to 

take out more loans, as discussed in Fact 4. Other contributing factors include: rising tuition as state 

governments have cut funding; parents’ impaired ability to use the equity in their homes to offset 

some portion of their children’s college costs; and the fact that students are taking longer to repay 

their loans. Consistent with these factors, average real per borrower debt increased from $24,000 in 

2004 to $30,000 in 2012.

22 Since 2012, total originations have fallen, and since 2010, originations per 

borrower have fallen; however, the fraction of students borrowing remains high from a longer-term 

perspective. Around half of students borrowed student loans during the 2013-14 school year, up from 

around 30 percent in the mid-1990s.

23

With the gap in earnings between college- and high school-educated workers both large and growing, 

college-educated Millennials are more likely to earn higher wages and be employed than those without 

a college degree. A four-year degree yields approximately $570,000 more in lifetime earnings than a 

high school diploma alone, while a two-year degree yields $170,000 more.24 Importantly, research 

finds that the earnings gains from attending college are broad-based, as both lower-skilled students 

attending basic college programs and higher-skilled students attending elite colleges stand to benefit.

25

 

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.
17

However, one concern with rising average student debt levels is that a non-trivial minority of 

borrowers might face financial difficulties managing and paying down their debt. Recent increases in 

the prevalence of delinquent student loans point to some of the challenges that borrowers face.

26 In 

addition, the defaults appear to be concentrated among borrowers who do not graduate from a fouryear institution and those attending for-profit institutions. Since borrowers may also receive lower 

returns to their education from such institutions, the burden of paying back their loans may present

an even greater financial challenge.27

 

26 Federal Reserve Bank of New York (2014). 

27 Deming, et al. (2014).

3.7

16.8

19.2

29.4

0

5

10

15

20

25

30

35

Borrowers who

graduated

Borrowers who

dropped out

Borrowers who

graduated with a

certificate from forprofit, less-thanfour-year institutions

Borrowers who

dropped out of forprofit, less-thanfour-year institutions

Figure 10: Percentage of Borrowers Who 

Defaulted on Their Loans up to Six Years after Initial PostSecondary Enrollment

Source: Beginning Postsecondary Students, BPS: 2004/2009; CEA calculations.

Percent
18

Fact 7: Millennials are more likely to focus exclusively on studies instead of 

combining school and work.

With college enrollments at historic highs there has been a corresponding decline in labor market 

participation among 16 to 24 year-olds. As Figure 11 shows, about 90 percent of young adults are 

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 since 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 

who are not enrolled, as shown in Figure 12.

28 The result is that more students are focused exclusively 

on their studies during school years. On the other hand, labor force participation has been relatively 

stable for 18 to 24 year-olds 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 Scott-Clayton (2012) also finds that college students have become less likely to work for pay while enrolled over this 

period. 
19

Focusing exclusively on school enables students to invest more time building skills that will be highly 

rewarded in the labor market later on. Moreover, research suggests that the returns to working during 

the school year, particularly while in high school, have declined over time.29 These trends in 

participation make economic sense. As Millennials enter the labor market after finishing school, these 

investments can also start to pay off for the economy as a whole. 

 

29 Baum and Ruhm (2014).

20

30

40

50

60

70

80

90

1989 1991 1993 1995 1997 1999 2001 2003 2005 2007 2009 2011 2013

Figure 12: Labor Force Participation by Enrollment Status, 

1989-2013

Source: Current Population Survey; CEA calculations.

Note: Enrollment includes full-time and part-time students.

Percent

Not Enrolled, 18-24

Not Enrolled, 16-18

Enrolled in College, 18-24

Enrolled in High School, 16-18
20

Fact 8: As a result of the Affordable Care Act, Millennials are much more 

likely to have health insurance coverage during their young adult years.

As a result of the Affordable Care Act, Millennials have much better health insurance options during 

their young adult years than past generations. Since September 2010, young adults have generally 

been eligible to remain on a parent’s health insurance policy until they turn 26. Previously, young 

adults frequently lost access to a parent’s plan when they turned 19 or graduated from college. In 

addition, as of the beginning of 2014, 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.

From the time the Affordable Care Act’s dependent coverage provision took effect in 2010 through the 

first quarter of 2014, the uninsurance rate among individuals ages 19 to 25 fell by 13.2 percentage 

points, a 40 percent decline.

30 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 

National Health Interview Survey began using its current design in 1997.31 Other analyses using private 

survey data show that overall insurance coverage continued to expand during the second quarter of 

2014, so these estimated gains are likely to grow in the coming months. Moreover, analysts predict

that coverage will continue to expand in the years ahead.32

Having health insurance has been shown to improve access to health care, health outcomes, and 

financial security.

33 Research focused on the Affordable Care Act’s dependent coverage expansion has 

 

30 This change is measured relative to the average uninsurance rate from 2009:Q4-2010:Q3. The dependent coverage 

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 CEA (2014a).

0

5

10

15

20

25

30

35

40

45

50

1997 2000 2003 2006 2009 2012 2015

Figure 13: Uninsurance Rate Among 19 to 25 Year-Olds

Dependent

Coverage 

Expansion 

1st Open 

Enrollment

Percent

Source: National Health Interview Survey; CEA calculations.

2014:Q1
21

found evidence for similar effects. Researchers have found that in tandem with the sharp increase in 

insurance coverage following the law’s enactment, young adults became less likely to delay or entirely 

forgo care due to cost and markedly less likely to face large out-of-pocket medical expenditures.34

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 

being in excellent health.35

Greater access to health insurance coverage outside the workplace during young adulthood may also 

generate important labor market benefits by allowing workers to obtain additional schooling or choose 

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 

research examining similar state laws found significant gains in ultimate educational attainment as well 

as higher wages later in life.36 Other research has similarly found that the Affordable Care Act’s 

dependent coverage expansion reduced employment lock and increased labor market flexibility, 

allowing workers to change jobs without the fear of losing health insurance.

37

Millennials are also poised to benefit from another important development in our nation’s health care 

system: the striking slowdown in the growth of health care costs. From the time the oldest 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 

80 percent lower than the prior average (see Figure 14). Economic theory and empirical evidence 

demonstrate that higher benefit costs are ultimately borne by workers in the form of lower wages and 

salaries.38 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 wages and salaries for Millennials relative to their 

predecessors. 

 

34 Sommers et al. (2013). Blum (2012). Chua and Sommers (2013).

35 Antwi, Moriya, and Simon (2014); 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).
22

-5

0

5

10

15

20

25

1980 1990 2000 2010

2014:Q2

Employment Cost Index - Health Benefits

GDP Price Index

Figure 14: Growth in Employer Health Benefit Costs, 

1981-2014

Year-over-Year Percent Growth

Source: Bureau of Labor Statistics, Bureau of Economic Analysis; CEA calculations.
23

Fact 9: Millennials will contend with the effects of starting their careers 

during a historic downturn for years to come.

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, on a seasonally-adjusted basis. Since then it has come down 4.7 percentage 

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 faster than any time since the early 1980s. 

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 rate, the number of employed Millennials increased 

by 990,000, a noticeable acceleration from the 786,000 Millennials that found work during the yearearlier period. 

Examining the twelve month averages of various measures of unemployment, allows us to look at how 

much different indicators of unemployment have recovered for this age group compared to their 

prerecession averages. The 12-month average of the unemployment rate as of August 2014 for 

Millennials is roughly three-quarters of the way back to its pre-recession average, broadly in line with 

the extent of recovery for other groups. 39 The recent improvement in labor market conditions for 

Millennials broadly mirrors that of the broader population, as do the outstanding challenges. The 

fraction of Millennials unemployed for less than 26 weeks has recovered more than the fraction of 

long-term unemployed, just as is the case for the population as a whole. Long-term unemployment 

remains a challenge for Millennials and for the country in general, as we work to get more of the longterm 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 

Population Survey Microdata were only available through August 2014 at the time this report was published.
24

Other indicators tell a similar story—while Millennials have made a substantial labor market recovery, 

that recovery is not complete and is slightly lagging that of other age groups, consistent with prior 

recessions. Broader measures of joblessness also indicate that the recovery is making progress. For 

example, measures of unemployment that account for people who are discouraged from looking for 

work or are only available for work under certain conditions were roughly 70 percent back as of the 

12-month average ending in August 2014 to their pre-recession average, while those that include 

people who are working part-time, but would prefer full-time hours were 55 percent recovered.

The unemployment rate has recovered similarly among Millennials regardless of education, however, 

this similarity masks big differences in the levels of unemployment by education. The unemployment 

rate of 25-34 year old Millennials with a college degree was 3.7 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 in Figure 16 yet more work remains to be done to ensure a full recovery. Younger 

workers have less experience and more tenuous connections to employers than older workers, so they 

are often laid off in greater numbers and have to compete against more experienced workers for new 
25

jobs once recovery begins. They therefore tend to be among the last groups to recover fully from a 

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. Research shows 

that entering the labor market during a recession can result in substantial earnings losses that persist 

for more than a decade, with negative effects lasting longer for college graduates.

40 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 

new entrants take jobs that are a worse fit for them when they start their careers in a recession.41

However, research 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 

boost earnings for Millennials over the course of their lifetimes—and help to offset any longer-term 

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 living. 

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 17), Millennials, like all young people, are more 

optimistic than older respondents.

 

40 Kahn (2010); Oreopoulos et al. (2012), Wozniak (2010).
26

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 

pursued more conservative investing strategies throughout their lives.42 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).

0

10

20

30

40

50

60

70

80

90

100

1994 1996 1998 2000 2002 2004 2006 2008 2010 2012

Agree Rate - 18 to 34 Year Olds

Agree Rate - 35 to 65 Year Olds

Percent

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?

Source: General Social Survey, 1994-2012; CEA calculations.
27

Fact 10: Investments in human capital are likely to have a substantial payoff 

for Millennials.

Recent college graduates continue to out-earn individuals with only a high school diploma, a gap that 

has been increasing over time. The college premium, the difference between median earnings for 

college versus high school graduates, increased from 60 percent in 2004 to roughly 70 percent in 2013.

Holding a college degree (associates or bachelor’s) results in a much lower probability of having 

earnings in the lowest income tax bracket—16 to 28 percent for college degree holders versus 37 to 

41 percent for those with no college degree (Figure 18). Bachelor’s degree holders are also 6 times 

more likely to have earnings in the top income tax bracket than those with only a high school degree. 

In addition to earning higher wages on average, individuals with a college degree are less likely to be 

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.

Returns to education are 5 to 10 percent per year of schooling, with most estimates in the 7 to 10 

percent range.

43 The gains from a college education are high, both for lower-skilled students attending 

basic college programs and for stronger students attending selective colleges.44 Median real hourly 

wages for 21 to 25 year-old college graduates are even higher than median real hourly wages for 26 to 

34 year-old non-college graduates, who have had more time in the labor market. College therefore 

remains a strong investment for most students—and will raise income levels for Millenials for decades 

to come well above where they would have been without those investments.

 

43 Psacharopoulos 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.

41

37

28

16

22

20

19

11

16

16

17

14

9

10

14

15

6

5

8

11

3

4

6

9

4

7

8

24

$1-$20,000 $20,000-$30,000 $30,000-$40,000

$40,000-$50,000 $50,000-$60,000 $60,000-$70,000

$70,000+

Figure 18: Earnings Distribution of Workers

Ages 25 to 34 in 2013

Bachelor's Degree

Source: Current Population Survey Annual Social and Economic Supplement, 2014; CEA 

calculations.

Note: Percentages may not sum to 100 because of rounding.

High School Diploma

Some College

Associate Degree

Percent
28

While education remains a good investment, Millennials still face challenges associated with several 

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 college graduate 

who entered the market in the mid- to late-1990s saw his or 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 market at the start of the Great Recession.

0

10

20

30

40

50

60

Figure 19: Wage Growth for College-Educated Workers 

Between Ages 23 and 28, by Cohort

Percent

Source: Current Population Survey, 1994-2008; CEA calculations.

Note: Cohorts are grouped by the year in which individuals turned 23. 
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 in 

fact, as Figure 20 shows, contrary to popular perceptions Millennials actually stay with their employers 

longer than Generation X workers did at the same ages. This reflects the fact that Millennials face a 

labor market characterized by longer job tenure, fewer employer switches and other types of career 

transitions, and lower overall fluidity in the labor market.

45 Figure 20 shows that Millennials are less 

likely to have been with their employer for less than a year than Generation X workers were at the 

same age, and they are more likely to have been with their employer for a fairly long period like 3 to 6

years.46

Young workers spending more years with their employers has important advantages in terms of job 

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 

favorable development. But longer tenures come with potential trade-offs.. Switching jobs has 

historically been a major source of wage growth for young workers, and longer spells with the same 

employer raises concerns that reduced fluidity of labor markets may be curtailing wage growth, 

particularly for young workers.47

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 

long-term unemployment in the wake of the recession, a fact that has also affected young workers as 

 

45 Davis and Haltiwanger (2014); Hyatt and Spletzer (2013).

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 

currently only available through 2010.

47 Topel and Ward (1992).

0

5

10

15

20

25

30

35

40

45

50

<1 1 2 3 4 5 6+

Generation X

Millennials

Sources: Current Population Survey Job Tenure Supplement, 1996-2010; CEA calculations.

Note: Data for Generation X (born 1965-1979) reweighted to match age distribution of 

Millennials (born 1980 or later).

Percent

Figure 20: Job Tenure in Years for Millennials and 

Generation X at Ages 18 to 30 
30

shown in Figure 21. Moreover, long-term unemployment appears to have trended up in recent 

decades. This means some young workers will face longer spells of unemployment in their early years 

than did past cohorts, which may reduce earnings for affected workers as building employment 

experience takes more time. Again, education can play a critical role because the increased educational 

attainment of Millenials will tend to go in the opposite direction, reducing unemployment and helping 

them build job experience over time.
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 larger 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 

attainment gap with men that dates back to World War II, as shown in Figure 22.

48 In fact, starting in 

the late 1990s, just as the first Millennial cohorts were completing high school, women began to 

outpace 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 career 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 every decade since 1980. 

 

48 Goldin, Katz and Kuziemko (2006). . 
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 Millennials, as shown 

in Figure 24. Women’s incomes are essential to supporting the well-being of even more families since 

all parents work in roughly 70 percent of Millennial households with children.

49

The benefits to working for Millennial women are greater, 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.
33

important role that women’s earnings play in the household. Almost all young men and women think 

that women with school age children should work and more than half think that women should work 

when they have children younger than school age (Figure 25).50 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. Focusing 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 difficult 

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 small children. 

 

50 General Social Survey
34

Fact 13: Millennials tend to get married later than previous generations.

Since 1950, the median age at which both men and women have married has steadily increased. In 

1950, men first married at age 22.8 and women at age 20.3; by 2013 the median 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 30 percent of 20 to 34 year-olds were married, 

compared to 77 percent in 1960.51

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 Millennials 

are more likely than the rest of their peers to be married. This reflects a shift in marriage-education 

patterns: in 1980, those with a college-degree were the least likely to be married. This difference is 

largely reflective of changes in the marital behavior of women. For much of history, women with 

college-degrees were the least likely among their peers to ever marry. In more recent decades, collegeeducated women caught up, largely by marrying at later ages.

52 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 

years.53 The fact that so many now marry later makes it difficult to predict what marriage rates will 

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 Stevenson (2010).

53 Decennial Census (2000); American Community Survey (2010).
35

Generation Xers and Baby Boomers did at similar ages. Similarly, they are more likely to believe that 

they will have kids. 

Later marriage and longer time in school are also connected to delaying family formation until later in 

life. Figure 28 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 

even more likely to live in such a household. Accordingly, most Millennials will be working at the same 

time they are helping care for their families.
36

Balancing family and work obligations is difficult for many workers, particularly those who lack access 

to flexible work arrangements or paid leave.

54 While Millennials are more likely than older workers to 

have access to flexibility in where and when they work, only 45 percent have access to paid leave 

(compared to about 66 percent of older workers).55 Millennials report that having a career and having 

a family is important, but 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.
37

Fact 14: Millennials are less likely to be homeowners than young adults in 

previous generations.

Entering adulthood during the Great Recession and recovery has not only affected Millennials’ 

schooling and employment decisions, but also their housing and household formation patterns. In the 

aftermath of the Great Recession, the share of 18 to 34 year-olds living with their parents increased

from 28 percent in 2007 to 31 percent in 2014 – 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 level implied by 

more typical rates of household formation and headship.

As discussed in Fact 3, Millennials have stronger relationships with their parents than previous 

generations and parents of Millennials are much more involved in their children’s lives. Perhaps it is 

not surprising that a generation that values living close to their families as much as Millennials would 

also be somewhat more likely to live with their parents as adults, particularly in an economy that is still 

recovering from a large recession.

56 Moreover, the increased enrollment of Millennials in college as 

discussed in Fact 4 may contribute to a rising share of Millennials living at home, as students often rely 

on their parents for housing and other financial support.57

 

56 As shown in Fact 3, 49 percent of 12th grade Millennials said that living close to family and friends is very important 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 classification 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 

and among 25 to 34 year-olds, the share living with their parents increased during the Great Recession and remains 

elevated.
38

The labor market is another factor contributing to the increased number of young adults living at home

and the concurrent decline in headship. The rapid decline in the unemployment rate in recent years 

has somewhat boosted the headship rate and is putting downward pressure on the share living with 

their parents. Historically, the headship rate has had a significant cyclical component: since the 1970s, 

the headship rate among young adults has generally tracked their employment-to-population ratio 

closely.58

This cyclical relationship 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 children in times of labor market 

adversity, the majority of young adults living at home report that their own financial situation has 

improved.59

However, the share of Millennials living at home has increased even among those with jobs, which 

points to a role for factors outside the labor market. For instance, research suggests that increases in 

rents across many metropolitan areas during the Great Recession are likely to have depressed 

headship.60 Moreover, the non-monetary costs of living at home may have decreased, again 

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 their own parents at the same age. One in ten parents with 

children ages 16 to 24 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 Boomerang 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 negative relationship with headship rates (see Haurin et 

al. (1993)).
39

30 report often having major arguments with their own parents.61 Similarly, increased interaction with 

family does not appear to have a deleterious effect on the quality of Millennials’ family ties. A recent

survey found that Millennials living at home are just as satisfied with their family life as those who are 

not living at home.62

Consistent with lower headship rates, young 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 34 year-olds during the 

housing boom. Not surprisingly, the housing boom attracted a particularly large share of 18 to 34 yearolds relative to historical trends.

Taking a longer view, the lower likelihood of homeownership among Millennials today is largely in line 

with longstanding declines in homeownership among young people. While disentangling the factors 

contributing to contributing to the lower likelihood of owning a home in recent years is difficult, at 

least three forces appear to be at play. First, the gradual shifts in labor force participation, increased 

college enrollment, and delayed marriage discussed earlier in this report suggest that Millennials are 

delaying homeownership until they grow older, rather than substituting away from homeownership 

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, following the usual path to homeownership.

Second, the more recent decline in the probability of homeownership for 18 to 34 year-olds is strongly 

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.
40

recovery well under way for Millennials, maintaining flexibility in their location decisions as renters 

could provide an advantage as they consider the job opportunities that come their way.

Lastly, today’s tight lending environment may also be to blame. The share of those under age 30 with 

credit scores below 680 – a lower credit score on the spectrum from 300 to 850 – is approximately 67 

percent, whereas this portion of the credit score distribution is less represented among older age 

groups. With regulatory constraints leading lenders to apply additional credit overlays for those with 

low credit scores, Millennials are likely to face challenges obtaining mortgage credit. Survey evidence 

collected by the Federal Reserve Bank of New York suggests that about 22 percent of borrowers with 

scores below 680 may decide not to apply for mortgage credit in the first place, perhaps because they 

feel discouraged by a prior rejected credit application, the lending environment, their employment 

prospects, or the financial burdens of paying down other debt.

63

It is worth mentioning that some observers suggest that rising student loan debt burdens are dimming 

homeownership prospects for Millennials.64 For many reasons, including the fact that their returns to 

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 concentrated 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 

improve. Moreover, delinquencies on all types of credit have been steady in recent years, suggesting 

that, for some, the negative effect of missed student loan payments is somewhat offset by making 

consistent payments on their credit cards or auto loans.65 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).
41

delinquencies have 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.
42

Fact 15: College-educated Millennials have moved into urban areas faster 

than their less educated peers. 

Urban living in the United States has seen a resurgence during Millennials’ lifetimes.66 In keeping with 

this trend, Millennials are more likely to live in urban areas than earlier generations were at similar 

ages.67 Growth in the share of 25 to 34 year-olds living in cities has been largest among mid-sized 

metropolitan areas (defined here as the 6

th to 90th largest metro areas). These mid-size cities have 

attracted both college and non-college educated Millennials and have seen growth of around 5

percentage points in the share of the young adult population living in them today from 30 years ago.

This is in keeping with long-term trends among the U.S. population generally, as the American 

population as a whole has moved from non-metropolitan areas towards mid-sized cities over the same 

30-year period, albeit to a lesser extent.

The move toward cities has been greater among the college educated, who have increased their 

likelihood of living in both large and mid-sized cities. Overall, 73 percent of 25 to 34 year-olds with a

college education were living in large or mid-sized cities in 2011, compared to 67 percent in 1980.68

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 lesseducated peers or Americans in general.69 Americans overall are more likely to live in metropolitan

 

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 patterns with the 

most recent years of data.

69 American Community Survey; CEA calculations.
43

areas away from the Atlantic or Pacific Coasts than they were in previous years. However, 25 to 34 

year-olds in 2011 with a college education were slightly more likely to be found in a metropolitan area 

on the East or West Coast than they were around 30 years ago (33 percent versus 31 percent).70 For 

those without a college degree, the proportion living on the coasts declined slightly over the same 

period (from 25 percent to 24 percent).71

Research in recent years has found that Americans with different levels of education are increasingly 

living in different areas. Berry and Glaeser (2005) note that since 1980, college graduates have 

gravitated towards urban areas that had higher levels of educational attainment 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 economic opportunity.

 

70 Ibid.

71 Ibid.
44

Conclusion

The Millennial generation has taken part in many important transformations: from shifting ways of 

communicating and using technology, to changes in parenting practices, educational and career 

choices, and 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 policy 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 

institutions as well as the labor market. For example, “crowdfunding” has enabled entrepreneurs to 

raise capital from diffuse sources online, rather than relying on traditional sources like banks to grow 

their businesses.72

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 

during the downturn. Even as the economy improves, we expect enrollment to keep growing as long 

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 

coverage than young workers in the past. Since the Affordable Care Act’s dependent coverage 

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 Affordable 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 

wages, earnings, savings and investment patterns, and trust in institutions among these individuals. 

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 know 

how large and lasting these impacts will be.

 

72 Hemer (2011); Agrawal, Catalini, and Goldfarb (2013).
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, 

Millennials 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 impacts 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, 

and there has been a recent increase in student debt delinquency rates even as delinquency rates on 

other types of debt have come down as the economy has recovered. 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 

trends raise concerns that some borrowers—particularly those who do not graduate from four-year 

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 historically closely tracked 

overall employment trends. The tight credit market has also made it more difficult to procure a 

mortgage. Nevertheless, longer-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. 

Millennials are marrying later and less often than previous generations, while marriage rates have 

fallen especially 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 

significant relationships with economic mobility and opportunity.73

So, while there are substantial challenges to meet, no generation has been better equipped to 

overcome them than Millennials. They are skilled with technology, determined, diverse, and more 

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 investment, 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).
46

References

Agrawal, Ajay K., Christian Catalini, and Avi Goldfarb. 2013. “Some simple economics of 

crowdfunding.” NBER Working Paper 19133.

Akers, Beth. 2014 “Reconsidering the Conventional Wisdom on Student Loan Debt and Home 

Ownership.” The Brookings Institution.

Antwi, Yaa Akosa, Asako S. Moriya, and Kosali Simon. 2013. "Effects of Federal Policy to Insure Young 

Adults: Evidence from the 2010 Affordable Care Act's Dependent-Coverage Mandate." American 

Economic Journal: Economic Policy, 5(4): 1-28.

Antwi, Yaa Akosa, Asako S. Moriya, and Kosali Simon. 2014. "Access to Health Insurance and the Use 

of Inpatient Medical Care: Evidence from the Affordable Care Act Young Adult Mandate." NBER 

Working Paper 20202.

Baicker, Katherine and Amitabh Chandra. 2006. “The Labor Market Effects of Rising Health Insurance 

Premiums.” Journal of Labor Economics 24, no. 3: 609-634.

Bailey, Martha J. and Susan M. Dynarski. 2011. “Inequality in Postsecondary Education.” In G.J. 

Dunacan and R.J. Murnane (eds.), Whither Opportunity? Rising Inequality, Schools, and Children’s 

Life Chances. New York, New York: Russell Sage.

Baum, Charles L. and Christopher J. Ruhm. 2014. “The Changing Benefits of Early Work Experience.” 

NBER Working Paper 20413.

Berry, Christopher and Edward Glaeser. 2005. “The Divergence of Human Capital Levels Across 

Cities”. NBER Working Paper 11617.

Blum, Alexander B., Lawrence C. Kleinman, Barbara Starfield, and Joseph S. Ross. 2012. "Impact of 

State Laws that Extend Eligibility for Parents’ Health Insurance Coverage to Young Adults." 

Pediatrics 129(3): 426-432.

Brown, Meta, Sydnee Caldwell, and Sarah Sutherland. 2014. “Just Released: Young Student Loan 

Borrowers Remained on the Sidelines of the Housing Market in 2013.” Liberty Street Economics. 

Federal Reserve Bank of New York.

Card, David. 1999. “The causal effect of education on earnings.” Handbooks in Economics, 5

(3), 1801–1864.

Card, David and Thomas Lemieux. 2000. “Dropout and Enrollment Trends in the Post-War Period: 

What Went Wrong in the 1970s?” NBER Working Paper 7658.

Census Bureau. “America’s Families and Living Arrangements: 2013: Adults,” Table A1. 

http://www.census.gov/hhes/families/data/cps2013A.html.

Chetty, Raj, Nathaniel Hendren, Patrick Kline, and Emmanuel Saez. 2014. “Where is the Land of 

Opportunity? The Geography of Intergenerational Mobility in the United States.” NBER Working 

Paper 19843.

Chua, Kao-Ping, and Benjamin D. Sommers. 2014. "Changes in Health and Medical Spending Among 

Young Adults Under Health Reform." Journal of the American Medical Association. 311(23): 

2437-2439.

Congressional Budget Office (CBO). 2014. “Updated Estimates of the Effects of the Insurance 

Coverage Provisions of the Affordable Care Act, April 2014.”

Cohen, Robin A. and Michael E. Martinez. 2014. “Health Insurance Coverage: Early Release of 

Estimates from the National Health Interview Survey, January-March 2014.”
47

Council of Economic Advisers. 2014a. “Missed Opportunities: The Consequences of State Decisions 

Not to Expand Medicaid.”

Council of Economic Advisers. 2014b. “Nine Facts About American Families and Work.”

Davis, Steven J. and John Haltiwanger. 2014. “Labor Market Fluidity and Economic Performance.” 

Prepared for the Federal Reserve Bank of Kansas City’s symposium, August 21-23.

Deming, David J., Noam Yutchman, Amira Abulafi, Claudia Goldin, and Lawrence F. Katz. 2014. “The 

Value of Postsecondary Credentials in the Labor Market: An Experimental Study.” NBER Working 

Paper 20528.

Depew, Briggs. 2013. "Expanded dependent health insurance coverage and the labor supply of young 

adults: Outcomes from state policies and the Affordable Care Act." Working Paper.

Dettling, Lisa and Joanne Hsu. 2014. “Returning to the Nest: Debt and Parental

Co-residence Among Young Adults.”

Devereux, Paul J. 2000. “Task Assignment over the Business Cycle.” Journal of Labor Economics, 18 

(1): 98-124.

Devereux, Paul J. 2002. “Occupational Upgrading and the Business Cycle.” LABOUR, 16: 423–452. 

Diamond, Rebecca. 2013. “The Determinants and Welfare Implications of U.S. Workers’ Diverging 

Location Choices by Skill: 1980-2000.” Harvard University, mimeograph. 

http://web.stanford.edu/~diamondr/jmp_final_121813.pdf.

Dillender, Marcus. 2014. "Do More Health Insurance Options Lead to Higher Wages? Evidence From 

States Extending Dependent Coverage." Journal of Health Economics. 36: 84-97.

Ermisch, John. 1999. "Prices, Parents, and Young People's Household Formation." Journal of Urban 

Economics. Elsevier, 45(1): 47-71.

Ermisch, John and Pamela Di Salvo. 1997. “The Economic Determinants of Young People's Household 

Formation.” Economica. 64: 627–644.

Federal Reserve Bank of New York. 2014. “Quarterly Report on Household Debt and Credit.” August 

2014.

Fry, Richard. 2013a. “A Record 21.6 Million in 2012: A Rising Share of Young Adults Live in Their 

Parents’ Home.” Pew Research Center.

Fry, Richard. 2013b. “Millennials still lag in forming their own households.” Pew Research Center.

Gellman, Lindsay. 2013. “Mom, Stop Calling, I’ll Text You All Day.” The Wall Street Journal.

Glaeser. Edward L. and Joshua D. Gottlieb. 2006. “Urban Resurgence and the Consumer City.” Urban 

Studies 43(8): 1275-1299.

Goldin, Claudia, Lawrence Katz, and Ilyana Kuziemko. 2006. “The Homecoming of American College 

Women: The Reversal of the Gender Gap in College.” Journal of Economic Perspectives, 20:133-

156.

Goldman Sachs Research. 2014. “US Daily: Student Loan Debt: How Big a Problem?” 

https://360.gs.com/research/portal/research/econcommentary/?action=viewpage&st=1&d=17

215026&portal.page.printable=true&isRouted=true.

Gruber, Jonathan and Alan B. Krueger. 1991. “The Incidence of Mandated Employer-Provided 

Insurance: Lessons From Workers’ Compensation Insurance.” In Tax Policy and the Economy, 

Volume 5, edited by David Bradford, pp. 111-144. Cambridge, MA: MIT Press.

Gruber, Jonathan. 1994. “The Incidence of Mandated Maternity Benefits.” American Economic 

Review 84, no. 3: 622-641.
48

Haurin, Donald, Patric Hendershott and Dongwook Kim. 1993. “The Impact of Real Rents and Wages 

on Household Formation.” The Review of Economics and Statistics. 75(2): 284-293.

Hemer, Joachim. 2011. “A snapshot on crowdfunding.” No. R2/2011. Working papers firms and 

region.

Hoekstra, Mark. 2009. “The Effect of Attending the State Flagship University on Earnings: A 

Discontinuity-Based Approach.” The Review of Economics and Statistics. 91(4): 717-724.

Howe, Neil, and William Strauss. 2000. “Millennials Rising: The Next Great Generation.” New York. 

Vintage Books.

Hulbert, Jeffrey M. 2012. "The Impact of Dependent Coverage Legislation on the Job Choices of 

Young Adults." 

Hyatt, Henry R. and James R. Spletzer. 2013. “The Recent Decline in Employment Dynamics.” IZA 

Journal of Labor Economics 2(5).

Isen, Adam and Betsey Stevenson. 2010. “Women’s Education and Family Behavior: Trends in 

Marriage, Divorce, and Fertility.” NBER Working Paper 15725.

Kahn, Lisa B. 2010. “The Long-Term Labor Market Consequences of Graduating from College in a Bad 

Economy.” Labour Economics 17: 303-316.

Kaplan, Greg. 2012. “Moving Back Home: Insurance Against Labor Market Risk”. Journal of Political 

Economy 120(3): 446-512. Print.

Lee, Kwan-Ok and Gary Painter. 2011. “Housing Tenure Transitions of Older Households: How close 

do they want to live to their kids?” Lusk Center for Real Estate. University of Southern California.

Long, Bridget Terry. 2013. “The Financial Crisis and College Enrollment: How Have Students and Their 

Families Responded?” in How the Great Recession Affected Higher Education, eds. Jeffrey Brown 

and Caroline Hoxby.

Long, Sharon K., Genevieve M. Kenney, Stephen Zuckerman, Douglas Wissoker, Adele Shartzer, 

Michael Karpman, Nathaniel Anderson, and Katherine Hempstead. 2014. “Taking Stock at MidYear: Health Insurance Coverage Under the ACA as of June 2014.”

Malmendier, Ulrike and Stefan Nagel. 2011. “Depression Babies: Do Macroeconomic Experiences 

Affect Risk-Taking?” The Quarterly Journal of Economics 126(1): 373-416.

Moretti, Enrico. 2013. “Real Wage Inequality.” American Economic Journal: Applied Economics 5(1): 

65-103.

National Center for Economic Statistics. 2012. National Post-Secondary Student Aid Study 2011-2012.

Oreopoulos, Philip, Till von Wachter, and Andrew Heisz. 2012. “Short- and Long-term Career Effects 

of Graduating in a Recession.” AEJ: Applied Economics, 4(1): 1-29.

Paciorek, Andrew D. 2013. “The Long and the Short of Household Formation.” Finance and 

Economics Discussion Series 2013-26. Board of Governors of the Federal Reserve System (U.S.).

Parker, Kim. 2012. “The Boomerang Generation.” Pew Research Center.

Parker, Simon. 2009. The Economics of Entrepreneurship 114 (Cambridge).

Pew Research Center. 2014. “Parental Time Use.” http://www.pewresearch.org/data-trend/societyand-demographics/parental-time-use/

Psacharopoulos, George and Harry Anthony Patrinos. 2004. "Returns to Investment in Education: A 

Further Update." Education Economics 12(2): 111-134.

Ramey, Garey and Valerie A. Ramey. 2010. “The Rug Rat Race.” Brookings Papers on Economic 

Activity.
49

Saloner, Brendan, and Benjamin Lê Cook. 2014. "An ACA Provision Increased Treatment For Young 

Adults With Possible Mental Illnesses Relative To Comparison Group." Health Affairs 33(8): 1425-

1434.

Scott-Clayton, Judith. “What explains trends in labor supply among US undergraduates, 1970-2009?”

NBER Working Paper 17744.

Sisko, Andrea M., Sean P. Keehan, Gigi A. Cuckler, Andrew J. Madison, Sheila D. Smith, Christian J. 

Wolfe, Devin A. Stone, Joseph M. Lizonitz, and John A. Poisal. 2014. "National Health 

Expenditure Projections, 2013–23: Faster Growth Expected With Expanded Coverage And 

Improving Economy." Health Affairs 33(9):1-10.

Sommers, Benjamin D., Thomas Buchmueller, Sandra L. Decker, Colleen Carey, and Richard Kronick.

2013. "The Affordable Care Act has led to significant gains in health insurance and access to care 

for young adults." Health Affairs 32(1): 165-174.

Sommers, Benjamin D., Thomas Musco, Kenneth Finegold, Munira Z. Gunja, Amy Burke, and Audrey 

M. McDowell. 2014. "Health Reform and Changes in Health Insurance Coverage in 2014." New 

England Journal of Medicine 371, no. 9: 867-874.

Summers, Lawrence H. 1989. “Some Simple Economics of Mandated Benefits.” The American 

Economic Review 79, no. 2: 177-183.

Taylor, Paul and Scott Keeter. 2010. “Millennials: Confident. Connected. Open to Change.” Pew 

Research Center.

Thompson, Derek. 2014. “The Misguided Freakout About Basement-Dwelling Millennials.” The 

Atlantic.

Topel, Robert H. and Michael P. Ward. 1992. “Job Mobility and the Careers of Young Men.” Quarterly 

Journal of Economics 107(2): 439-479. 

United States Department of the Treasury. 2014. “Remarks of Deputy Secretary Raskin at the Annual 

meeting of the National Association for Business Economics.” http://www.treasury.gov/presscenter/press-releases/Pages/jl2652.aspx

Waldfogel, Joel. 2013. “Digitization and the Quality of New Media Products: The Case of Music.” In 

Economics of Digitization, eds. Avi Goldfarb, Shane Greenstein, and Catherine Tucker.

Whittington, Leslie and H. Elizabeth Peters. 1996. “Economic Incentives for Financial and Residential 

Independence.” Demography. 33(1): 82–97.

Wozniak, Abigail. 2010. "Are College Graduates More Responsive to Distant Labor Market 

Opportunities?" 2010. Journal of Human Resources. 45(4): 944-970. Revised version of 

"Educational Differences in the Migration Response of Young Workers to Local Labor Market 

Conditions," IZA Discussion Paper #1954.

Young Invincibles. 2011. “New Polls Finds More than Half of Millennials Want to Start Businesses.” 

http://www.kauffman.org/~/media/kauffman_org/research%20reports%20and%20covers/2011/

11/millennials_study.pdf

Zafar, Basit, Max Livingston, and Wilbert van der Klaauw. 2014. “Rising Household Debt: Increasing 

Demand or Increasing Supply?” Liberty Street Economics. Federal Reserve Bank of New York.

Zimmerman, Seth D. 2014. “The Returns to Four-Year College for Academically Marginal Students.” 

Journal of Labor Economics. 32(4).