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Millennials & business study: The good & the bad

May 17, 2013

 Jeff Lundy, Ph.D.,National-chamber-foundation
U.S. Chamber of Commerce Foundation Business Civic Leadership Center.

The Millennial generation is the future of the American public.  While the opinions of older generations might be set, this younger generation brings new perspectives on society that can change the perception of American business.  As the key to future perceptions of business, on what side will Millennials fall?  Will business garner a higher perception or a lower one from the youngest Americans?

This blog post is the first in a two-part series by the U.S. Chamber of Commerce Foundation on the topic of Millennials.  In this post, we will consider their role in changing the public’s opinion of business.  In the next post, we will consider a potential crisis of conflict among their generation.

The Issue of Trust

There are several reasons for the business community to be worried about its perception among the American public.  Survey research points to declining trust in big business, the financial system, and the CEOs who lead our companies.  In 2000, Gallup found that 23% of Americans expressed “very little” confidence in Big Business (essentially the same amount found in 1973 when they began asking this question).  By 2012, the number had risen to 34%, and nearly 80% of the public fell into the lower categories of “some” or “very little” confidence.  In a 2010 Bloomberg survey, when forced to choose between two extreme positions, 56% of the public preferred describing big financial companies as parasites having a negative effect on the economy, while only 40% preferred to say that they were a vital part of economic growth.  In 1966 Harris found that 55% of Americans felt a “great deal” of confidence about the people in charge of running major companies.  In 2010 that number was just 15%.

Not all results are negative.  Americans have much more confidence in people that run small businesses (50% expressed a “great deal” of trust in 2010) and in the institution of small business in general (63% expressed they had “quite a lot” or a “great deal” of confidence in 2009). In 2010, Gallup found that 95% of Americans had a positive image of Small business, 86% of Free enterprise, 84% of Entrepreneurs, and 61% of Capitalism.

The Good News

First off, as a generation, Millennials are very optimistic—41% of Millennials are satisfied with the way things are going in the country versus 26% of those over 30 years of age.  Hence, Millennials are more inclined to be positive about all institutions, business included.

In fact, according to a 2010 Gallup study (see table below), the age group of 18-29 year olds had the highest percentage with a positive image of free enterprise, capitalism, big business, and entrepreneurs.  Interestingly, they were also the group with the highest positive image of socialism too, reflecting the possibility that they are generally more positive than older generations.

Free enterprise

Capitalism

Big Business

Entrepreneurs

Socialism

18-29

94%

68%

56%

88%

51%

30-49

83

58

55

88

36

50-64

89

64

41

82

30

65+

79

54

43

76

30

Second, Millennials appear to have a more enterprising spirit when it comes to business.  In a 2011 Kauffman study, 54% of Millennials surveyed said that they would like to start their own business.  Of the 160,000 startups created per month in 2011, 29% were led by entrepreneurs between the ages of 20 and 34 years old. This is an impressive feat given that the youngest Americans have the least access to resources like personal capital.

Along the same lines, Millennials seem more proactive when it comes to communicating with businesses.  In one study, 86% of Millennials were willing to share information about their brand preferences online. This greater willingness to view business transactions as a two-way dialogue is an important way that Millennials differ from older generations.  Rather than being passive consumers, it appears Millennials feel empowered to directly interface with businesses through production of online content.

The Bad News

One of the most significant challenges faced by Millennials today is unemployment and underemployment.  Among those 25-34, 16.6% are underemployed (the rate is 28.6% among those 18-24). Among 25-29 year olds, 34% have “boomeranged” back to live with their parents. Their optimism in the face of these challenges is notable, but surely these levels of underemployment might leave them with a less-than-positive impression about the United States economy.

A second warning sign relates to Millennials and their education.  The Millennial generation is reaching unprecedented levels of graduation both from high school and college (72% and 40%, respectively).  Yet, this education may leave them sorely disappointed. Two-thirds of students predict they will perform in the top 20% of the population in their adult jobs. The mathematical impossibility of these expectations must lead to some personal conflict. What’s more, the cost of education is rising much faster than inflation, leaving many with student debt ($25,000 on average). This financial connection between education and debt may leave Millennials with a negative opinion about the economy, especially if their high expectations cannot be met.

Which way will they go?

Given the good signs and the bad signs, how will Millennials influence public opinion about business?  The best answer is that it is hard to say.  Millennials offer fresh challenges but also some unique opportunities.  If the business community seizes on these opportunities, this might be an especially influential time to shift public opinion by capturing the support of youth.

While the future is uncertain, one thing does seem clear:  Confidence in big business has declined persistently over the past 40 years. If we do nothing to engage them, Millennials will likely continue the trend toward less trust (especially since many suffered during the recession).  It behooves American business to adapt to this generation and seize upon their optimism.

  
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