Here is my latest piece for the Globe and Mail, It talks about the way that inequality is going to follow this generation of workers into their senior years.
Here is my latest piece for the Globe and Mail, It talks about the way that inequality is going to follow this generation of workers into their senior years.
Demographics drives a lot of things including Mergers and Acquisitions (M & A) activity. That is a lesson we are now learning from Japan, where there are apparently too few heirs to take over large companies as their boomer-aged Chief Executives head for retirement.
This piece from the Financial Times looks at what is going on, but the story is a simple one. Plenty of Japanese CEOs are baby boomers, meaning they are at retirement age or heading there soon. Whether they are company owners who do not have children at the ready to take over or simply in companies without a strong layer of younger managers, many do not have obvious successors. As a result, they are turning to advisory firms that can help them arrange mergers. The stocks of such advisory firms are on the rise and no wonder: Nomura Securities estimates that between now and 2040, there will be 40,000 companies per year in Japan facing succession and many of them will need help in arranging it.
Japan is an example of population aging gone crazy. In 2016, births fell below 1 million for the first time since births began to be recorded in 1899. It has become a vicious circle. Births have been low for years, which means there are few young women to have babies. Those that could are discouraged from doing so by a society where childcare for working mothers is very expensive. As a result, the fertility rate in Japan (the number of children the average woman has over her lifetime) was 1.45 in 2015, as compared to 1.86 in Canada and about 1.89 in the United States, and the number of births keep declining.
As in Japan, the fertility rates for Canada and the U.S. are below the ‘replacement level’ of two 2.0, but unlike Japan those countries rely on immigration to fill some of the gaps as do many industrialized countries. Japan frowns on immigration, however, meaning that the foreign born population in the country is less than 2 percent, compared to about 13 percent in the U.S. and over 20 percent in Canada. The end result is that the entire population is aging quickly, and the age of executives is as well.
Whether Japan is a unique case or there are lessons for North America here remain to be seen. Certainly there are huge differences in culture that suggest an-aging-CEO led M & A boom is not as likely in the U.S. or Canada. For one thing, Japan values having family-run companies more than most companies do, with many in that country boasting that they have been ‘family run’ for generations. The importance of being able to make that boast, however, makes that in many cases Japanese CEOs have gone as far as adopting an adult male. In fact, an astounding 90 percent of adoptees in Japan are apparently actually males between the ages of 25 and 30. Since being family-run does not matter as much in North America, there is no need for mergers to make it happen. As well, there are few large companies within North America that do not have a clutch of in-house candidates vying for any stray CEO openings.
Although North American companies may not merge between themselves immediately because of population aging, they may find themselves merging with Japanese ones. Given that the market within Japan for any products is also shrinking due to population aging, mergers with non-Japanese companies are also increasingly on the table. We saw a huge hint of things to come with the purchase of premium-spirits company Jim Beam by Japanese company Suntory holdings in 2014, but there may be much more to follow.
The way that aging affects North American companies may be different than the way that it does Japanese ones, but there are lessons to be learned from Japan just the same. Fewer people joining the workforce means the options for how to conduct business have to change. Mergers may be one unexpected thing to come out of population aging, but there will certainly be more – and more business opportunities – as boomers age in every country.
There are a lot of things robots can do, but they cannot make societies any younger.
Canada and the U.S. are aging – there is little debate about that. What exactly that will mean for the labor force and the economy is a bit more up for grabs, but to get an idea of how it may all play out we have the examples of those areas that have already gotten old ahead of us. One such area is East Germany, a town from which is profiled in this article from The Economist.
East Germany, if it was an actual separate country from West Germany, would apparently be the oldest country in the world. That is, at present Germany and Japan each have a median age of close to 47, but East Germany is indisputably older still. Following the installation of the Berlin Wall in 1989, young people headed for the west, leaving a smaller population to have families. The Economist quotes an official from a German think tank who puts what is going on rather succinctly: ‘kids not born in the ‘90s, also didn’t have kids in the 2010s. It’s the echo of the echo’. With deaths far out-pacing births, Germany as a whole is headed to having 40 percent of its population aged over 60 by 2050, with East Germany getting there first.
In the town profiled in the article, one apartment building in five is empty, and where two-thirds of kindergartens and over half of all schools have closed since 1990. There is a dearth of workers, particularly young workers, in the area. Not surprisingly, the biggest shortage is of those who are available to work in health care. particularly as it relates to the old. Immigration has filled some gaps, although refugees are not necessarily taking the available jobs, and tend to leave anyway. As one inventive solution, a local training school is arranging to have young people study German in Vietnam and then head into apprenticeship positions in the area. Were it not for measures such as that, small towns would potentially shrink even further and possibly be abandoned all together.
Are there lessons for North America here? Certainly there is a potential warning of how things might play out if more workers are not found. In Canada’s Atlantic provinces, for example, aging is happening more quickly than it is elsewhere, especially in non-metropolitan areas. That is already straining government budgets which are facing the reality of fewer tax-paying workers and stronger draws on health care services. In Canada and in many countries things may well get worse. After all, it is an old equation: you grow an economy through population growth, and through productivity. If population growth is not there, all things being equal that means you grow less quickly. If East Germany does end up short of 5 to 7 million workers by 2030, as some experts predict, then economic growth is certainly going to suffer.
Or is it? To me, the wildcard in all of this is the impact of technology, something that is not really mentioned in the article. After all, apprentice humans will not be needed if ready-out-of-the-box robots actually replace the need for many job functions. That is a concept that is not as far in the future that many of us may like to consider. According to one study from the University of Oxford, about half of all jobs are vulnerable to being replaced by automation. Analyses from the Bank of England and the World Economic Federation (WEF) have reached similar conclusions. No one knows exactly the final figure or the pace of how it will happen in different countries, but it is certain that some job functions will not be needed in future, although in previous industrial revolutions (this one, according to the WEF is the fourth) other jobs have sprung up to replace them. Regardless, the absolute shortages of workers in East Germany or in North America may turn out to be less severe than sometimes predicted. That may not help individual workers keep up their standard of living, but it will keep industries running and promote overall growth.
Then again, even if technology replaces the need for some workers, it will not make up for the fact that societies will be populated by old, and getting older, people. Whatever happens in terms of technology, the reality is that many schools will indeed need to be turned into care homes sooner rather than later. Even if robots are able to staff some of those homes, they will not change the fact our societies will have a different overall vibe.
Robots will not judge whether the vibe from an older society is better or worse than the one we have today, and perhaps no one else should either.
What if you built a wall to keep people out, and it turned out that no one really wanted to get in anyway? Okay, some people might still want to enter the U.S. from Mexico and other countries which have typically supplied low skill labor, but it looks like their numbers are dwindling. In fact, thanks to some demographic trends that are getting lost amidst the general hubbub, it may be that the numbers of migrants are headed down anyway, no wall required.
Demographics explain a lot, or at least that is my bias. They certainly explain a lot of the reasons why there was such a rush to countries like the U.S. from Mexico and Latin America in the past decades. The U.S., like much of the world, had a baby boom that lasted until the mid-1960s. That meant the supply of domestic-born, young, labor grew rapidly until the 1980s and then grew less rapidly thereafter. In other parts of the world, including Mexico, the baby boom went on longer which meant that young, low-skilled workers jostled with each other to get jobs in their home countries. Inevitably, some headed for the U.S., some illegally. That’s the part of the story we know, and it is that rush to reduce the number of illegal immigrants that is behind the idea of putting up a wall between the U.S. and Mexico. Except, maybe those who want that wall should maybe be considering whether it is worth the trouble.
The situation is outlined in this paper by economists Gordon H. Hanson, Chen Liu and Craig McIntosh of the Brookings Institution. As they see it, between the early 1980 and the mid-2000s, there were lots of reasons for migration from Mexico and elsewhere in Latin America to the U.S.. The U.S. economy was strong, and for those seeking relatively low-paying work, there was not a huge amount of competition from the U.S. born population, a situation at odds with their circumstances at home. Around the time that the last recession hit the U.S., however, the undocumented population in the U.S. declined by an annual average of 160,000 for the years from 2007 to 2014. Economics, the authors believed, just hastened a story that was going to happen anyway as a result of demographics.
So what does come next? Well, again you need to look at the demographics to understand it. The authors did that and came up with a very dramatic profile of what they expect migration to the U.S. to be over the next decades. Using population projections from the United Nations as well as historical migration data, they modelled the likely inflows into the U.S. through 2050. The picture they came up with for the next thirty years looks almost like the inverse of the last thirty. And keep in mind that is not assuming any kind of wall, merely a continuation of demographic shifts that are already taking place.
The dwindling supply of young labor post-baby boom is one that is being mirrored in many countries including China. Think about it: Mexico provided cheap labor for Americans while China provided cheap goods made by cheap labor. When all of these countries age, what happens to the cost of living in the U.S. and elsewhere? It is an economic problem that does not get discussed as much as it should, but the reality will hit soon enough.
In the meantime, plans for a wall continue. No doubt once constructed the numbers of migrants from Mexico will fall, but analysts looking at the future numbers might want to consider the actual cause of that decline.
If I had to think of an industry prone to poisonous industrial relations battles I would probably think first or the auto sector, or maybe even something like education or health. The battles in those industries, however, are apparently being matched by orchestras (can I say ‘in the orchestra industry’?) across North America. Like many people, I tend to think of the music industry as full of a few superstars and many starving artists, but as it turns out that is not quite the full picture. Orchestras, as it turns out, have long been a unionized sector, and like other unionized sectors they are facing changing times a tumultuous period of restructuring.
Orchestras are actually a fascinating sector, albeit fascinating like watching a train wreck. Over the past few years, a host of North American symphonies have faced bankruptcies and closures (those in Louisville, Honolulu and London, Ontario are examples), long strikes and lockouts (notably affecting orchestras in Philadelphia and Pittsburgh this year) and deficits (the New York Philharmonic and the Toronto Symphony Orchestra come to mind but there are actually too many to list). They play pretty music, but they are actually going through ugly times.
Not surprisingly, much of the source of strife in the orchestra sector is happening because of money issues. Like firefighters and autoworkers, orchestras are finding that the non-profits that have long employed them no longer have the means or the desire to pay for what had been long-held contracts. In Pittsburgh, for example, players have been making a base rate of $107,000, which is something over $51 an hour not including benefits, which is in contrast to an what the Bureau of Labor Statistics says was an average wage in Pittsburgh of little over $22 an hour as of 2015. The current dispute centers around a plan to cut musicians’ salaries by 15 percent, and as well to freeze their pensions and to reduce the size of the ensemble.
Some argue that the market for musicians is intrinsically different than say the market for retail workers. If you ‘let the market decide’ on the level of salaries, goes the argument, you would not get you the best musicians. That is, the salaries for retail workers might be low since there are so many people willing to do the work, and since the job is simple enough that there is no shortage of qualified people. There may be lots of unemployed musicians, but if you let them outbid each other to work cheap, you might not get the ‘best’ ones. And $100,000 there is a different pool available than there might be at $30,000, or at a ‘pay by the gig’ agreement.
There is some merit to this view. For one thing, I would argue that at the higher salary, you are not only choosing different workers, but as well guarding against the turnover that would inevitably happen if you hired at a lower or a gig rate. It would only make economic sense for musicians to migrate towards better paying short term gigs if they did not have security and a decent salary. Whether that decent salary should be above what a nurse gets paid (which in Pittsburgh is $25.84 an hour according to payscale.com) is up for debate, however. And, the overriding trend in the labor market is to ‘gigify’ even the most traditional of jobs, which means the musicians are fighting a bit of a losing battle.
The bigger question really is what the correct industry model should be for orchestras. Should they be considered a public good, and therefore pretty much paid for by the state as they are in Europe? Or should they be left to sell tickets to pay their costs? That one is a bit of a non-starter if you want orchestras to survive, since virtually none are able to do so without outside support. According to a report by the League of American Orchestras, detailed in this story from The New York Times, as of 2013 (the last year for which data is available) orchestras had reached a ‘tipping point’ where they now rely more on philanthropy than ticket sales to generate revenue. Of course, private sector philanthropy rather than government grants could theoretically work, although there are far more demands for revenue from arts organizations than there is money to go around.
In my reading of it, orchestras actually should be a growth industry and the well managed ones could face a bright period ahead. Think about the major changes we are seeing as an economy and as a society. One of the biggest ones, to me, is the retirement of the baby boomers which will give a lot of people nothing but time – and those with time have time for music.
Boomers, retired or not, are now searching for ways to give their lives more meaning. Getting involved in hobbies, and in particular in music is a natural way for them to do that. Baby boomers also want to be on boards or to do meaningful volunteer work, and to have some input into organizations that interest them. If orchestras can help them to do that, then the the next step for them is to get them to write checks. Rich boomers can write big checks and poorer ones can write small ones or buy tickets. The trick is to tell them what is available and make it accessible to them. Savvy orchestras have already increased the size of their marketing departments and community outreach programs in order to reach this market.
The existence of cultural institutions is also an important consideration as baby boomers think about where they want to live once they retire. When listing what they want close to them, many cite proximity to cultural and entertainment venues as a consideration. Florida, the haven for many pre-boomer retirees and in a way of model of how many communities will evolve, is actually a hub of small orchestras. Communities that want to attract or retain boomers would do well to retain their orchestras as well.
Even with higher demand ahead, the path for orchestra musicians is unlikely to be a smooth one. The economic future we are facing is one where many will go from gig to gig, and where job security is not a given for anyone. Musicians outside of the orchestra sector know what that career path looks like better than anyone. Perhaps they could give some coping lessons both to their colleagues and to the labor force at large.
Sure you can go for a run for free, but if you did you would be off trend. That is one take-away from some new statistics on where people are spending their fitness dollars. According to this article from Quartz (which quotes data from the International, Health, Racquet and Sportsclub Association, U.S. attendance at specialty gyms is on a tear. Money spent at fancy gyms like SoulCycle and Crossfit grew by 70 percent between 2012 and 2015, and those kinds of facilities now make up 35 percent of the fitness market. It is a pricy way to get fit, but then again the gyms as selling more than just fitness.
Any gym sells an experience, and that in itself is a good retail strategy. It has long been clear that people are open to paying for ‘experiences’ rather than things. Some of this might have to do with the move to not create ‘clutter’, which is a significant consideration given the popularity of books by people such as Marie Kondo. Beyond that, however, it seems that buying an experience just makes people happier, a finding that was borne out by recent research from San Francisco University. Travelling, playing golf, enrolling in an art class, going to a concert – all can make people more satisfied than they would be if they bought things at a mall.
Partly this is because of the social aspect of the experiences. If you buy a shirt for $80, you get the shirt. If you buy a ticket for that amount, you get the experience you paid for (hearing the music at the concert or whatever) plus the experience of being in a lovely concert hall with other people who enjoy the same music you do, whether that means the people you came with or the just other audience members. Selling a ‘luxury’ experience along with a good typically means you can charge more as well, something that Starbucks knows only too well. Yes, your latte may cost $4, but with it comes the chance to sit in a nice environment and work or socialize if you want.
The high end gyms do indeed sell a luxury experience, and if you walk into a yoga studio after having been used to a chain fitness membership, the difference in price can be stunning. As opposed to a big fitness chain that sells annual memberships at a relatively low monthly cost, high end fitness centers often charge by the class. As Quartz points out, that means that they are selling to people who are actually taking classes, rather than those who paid for a membership they may never use.
So why are people willing to pay so much? Partly because they get nice facilities and a nice product as their experience. They also get a sense of ‘belonging’ or ‘community’ something that is apparently absent from many people’s lives these days in North America. Crossfit is a great example of this. Working at a large company, I once saw one guy come up to another he had never met and say ‘I hear you’re a Crossfitter – I am too.’ It was an instant connection, as if they both had kids in the same class or maybe were Trekkies. Being a ‘Crossfitter’ is a bragging right, and is something that is bought along with the hefty price of attending classes.
As well as the social aspects of the gym experience, I would add that the boom in high ending gyms has a lot to do with economic trends as well. These days, one of the clearest retail trends is the split between luxury and economy. At the top end, Burberry and LVMH keep posting strong results, while at the bottom Walmart keeps prices low because their consumers are struggling to make ends meet eight years after the recession officially ended. So yes, gyms are a part of that trends. Towel service, nice toiletries, spa-like surroundings – these are all nice to have, and those who can afford them are apparently happy to pay for them.
Maybe I’m late to the party, but it was only recently that I heard the phrase ‘side hustle’. Apparently it has been around a while: way back in 2013, Entrepreneur.com tacked up an online definition, calling ‘a way to make some extra cash that allows you flexibility to pursue what you’re most interested in’. It can also be your true passion – a chance to delve into fashion, travel or whatever it is you care about the most without quitting your day job. More recently, it has been attached to the Millennial Generation who apparently have the right mix of creativity, tech savvy and financial need to makes the Side Hustle something of a given. In fact, the Side Hustle may work well with another trend, that of people being unhappy with their work lives. As it turns out, having a second, compelling career may make you more tolerant of your day job.
This article from Quartz spells out the way that it works. Quoting the author of a book called The Happiness of Pursuit, Chris Guillebeau, the author makes the point that in this day and age there is no need for ‘occupational purity’. That’s a new phrase to me too, but I like it. For so many people, the skills they now have and the jobs they now occupy will have to be re-thought every few years in the future. That is true for all workers – think about unemployed 50 somethings who need to think up new careers – but especially true for those just entering the labor force. Telling a 20something to pick a profession and assume they will be working at it for the next four decades or so seems like poor advice to me.
And so you have the Side Hustle. It has always existed for some out of economic necessity: for those pursuing a dream (wanting to be a rock star say), their reality also may mean being a barista or whatever. Which one of those jobs is the side hustle is a matter of opinion. The new-style Side Hustle is the one where the full time accountant sings in a rock band on weekends, or the customer service rep makes jewelry and then sells it on Etsy after hours. The singing accountants have always existed of course, as have the jewelry makers. What has changed is the technology that allows the jewelry to reach a wider audience – and perhaps as well the attitudes that now say it is a good idea for the accountant to channel his inner-Steve Tyler.
So why does it make people happier to have that side hustle? Well, clearly it makes them less invested in your regular job, which as we all know is hardly to be a job-for-life these days. More simply though, the side hustle can just make people happier and more excited about life in general, and that no doubt will have positive spillovers for their regular jobs, however mundane they might be.
While I like the tone of the Quartz article and do not disagree that having a richer life makes you happier, I think that we are going to see side hustles rise at an exponential rate, but for reasons more related to economics. These days, more and more companies are getting less and less committed to having huge numbers of people on the payroll. That means we are moving to a world with a mix of full-time work, side hustles, freelancers, part-timers and temporary workers. A lot about that mix makes those who study the economy and the labor market uneasy and worried about what that means for income security and economic growth, and I would not disagree that those are valid concerns. If those ‘new work world’ workers figure out how to make themselves a little happier amidst all of that, that might constitute a benefit that is harder to quantify but is a benefit just the same.
Here’s a new one to me: the ‘divorce mortgage’. No its not some crazy, invented term to describe a financing vehicle (my mind went back to ‘plain vanilla swaps’ from the days when derivatives were the buzz), but rather exactly what it sounds like: a mortgage that suits people who own a home together but are getting a divorce. Right now it is a British phenomenon, but it certainly has the potential to spread through the rest of the world as well.
The divorce mortgage, as it is being proposed, would make it easier for one partner to buy out the other and stay in the family home if a marriage breaks down. As it stands now, if a couple divorces their assets, including any appreciation in the home since they purchased it, are split. If one partner wants to keep the house, they have to buy out the other. Given that that is often difficult to do, particularly if there has been a lot of home price appreciation, more often that not houses get sold.
As described in this piece from The Telegraph, with the divorce mortgage a financial institution would lend the partner who wants to stay in the home enough money to pay out their spouse. The bank would also lend an extra amount that would be used to pay interest on the loan. After the set period time is up, the borrower would either sell the asset and pay the lender back, or take over the mortgage themselves, assuming their circumstances had changed enough to allow them to do so.
Although I could certainly understand why this arrangement would be appealing to borrowers (particularly if they had children they did not want to disrupt) it took me a moment to see the appeal to lenders. After all, divorce mortgage or not, either partner in a divorce is always able to buy the other out and stay in their house, providing that they had the financial wherewithal to do so. If they cannot afford it, why would the lenders be interested in financing it? The appeal, however, is apparently that whatever interest rate they charge on the loan makes it worth their time. And of course if the borrower if able to refinance at the end of the period, everybody wins.
As a loan, the divorce mortgage would work well for someone who believes they can get on their feet within a few years and buy out the house, or at least be in a better emotional space to sell it. For someone whose circumstances did not change within the time period, it would just put off the day when they had to move, although that could work too if the object was simply to stay in the home for a reason like waiting until the kids got older.
Whether or not the divorce mortgage gets implemented in Britain or in North America, looking for ways to safeguard financial assets after divorce are worth discussing and not just in a personal finance context. The reality is that the ‘grey divorce rate’ (which these days mostly encompasses baby boomers) is uncomfortably high, and with each divorce comes a splitting of assets that cuts into the funds available to fund retirements. Given that the majority of baby boomers do not believe they have enough saved for retirement anyway, the income prospects of the next wave of retirees is rapidly becoming a macroeconomic issue.
If the divorce mortgage provided a window that allowed assets to be better preserved, that would certainly be a good thing from a big picture point of view. However, given that it would work best for those whose incomes are likely to rise the fastest in the years following a divorce (and hence allow them to refinance) it is not clear to me that the existence of the divorce mortgage would make much difference in terms of boosting assets. And of course if the home depreciated in value, holding on to it would have definitely proved to be the wrong choice.
The divorce mortgage may not be the way to go, but this is definitely a good time to thing about financial vehicles that allow people to preserve assets even if they cannot preserve their marriages. For some it might be better if they could do both, but from an economics perspective it will certainly be a lot worse if they end up doing neither.
You might not have noticed it, what with one economic crisis and stock market meltdown after another grabbing your attention, but the last few decades have actually been great ones for investors. Thanks to a perfect storm of factors, investment returns for the period from 1985 to 2015 came in at well above the historical norm. The fundamentals are changing, however, and the next few decades are likely be quite different in terms of returns on both equities and bonds.
These predictions on the direction of the financial markets come from a new report from the McKinsey Global Institute (MGI), which chronicles why times have been good, and why there are likely to be less good in future. Of course, many people are probably surprised to hear that times have been so good. Over the past three decades there have been a number of economic and financial corrections which gave investors plenty of opportunities to lose wealth rather than build it. Still, as McKinsey documents, overall returns have been pretty solid Just looking at U.S. equities, for example, there was a return of 7.9 percrent over the period, as compared to 6.5 percent over the past century. For U.S. government bonds, the return was 5.0 percent compared to 1.7 percent.
The factors that caused the above-average growth are not factors that are likely to be repeated. For one thing, the past three decades have been marked by above-average global growth that has been powered in part by demographics. Countries, most notably China, have been able to draw on a relatively young workforce to hasten their industrialization process. Unfortunately, the world is getting older and as even newly-industrialized countries age, that advantage will lessen. As well, we have just come through an era of extraordinarily low inflation and interest rates that is unlikely to be repeated. Those factors aside, we are entering a period in which the corporations that once dominated will find the competitive environment much more difficult. Increasingly, new companies are springing up from the newly developing world, and as they do it will become increasingly difficult for North American companies to make the kind of profits that were once routine.
While I agree with all the assessments in the MGI report, the demographics argument is the one the one that I find the most compelling, and indeed is one that I speak on and have written on often. There is something called the ‘Demographic Window’ for a country that refers to the period when the mix of working age population is at a healthy level compared to younger people and those who have left the workforce. When the window is open you have the right conditions for growth, which ultimately powers the domestic and global economies. The window has been closed for years in Europe, and slamming shut in North America. What many people do not realize, however, is that it will also close in China within a decade, and in many other newly industrialized countries as well. As that happens, the prospects for growth start to diminish.
Although the McKinsey report does not touch on it explicitly, there is also evidence that having population in the right mix can make a big difference to the stock market. People in their 20s and 30s tend to be spending, those in their 40s and 50s are savers, and those in their retirement age tend to draw down their savings. As simplistic as that characterization may be, it tends to describe how people act over their lifetime when it comes to investments. Now, with baby boomers streaming into their retirement years and a smaller cohort to replace them, the prospects for equity markets – both in North America and around the world – look to be compromised.
McKinsey estimates that over the next thirty years, the returns on U.S. equities will be somewhere between 4.0 and 6.5 percent, as compared to the 7.9 percent over the previous thirty years. For fixed income securities, they look for a return of between 0 and 2.0 percent compared to the recent 5.0 percent. That is a relatively wide gap.
The implications of all this, while not exactly depressing, do suggest that there are some challenges ahead for investors. First, the fact that it is likely to be more difficult to obtain decent returns means that investors may need to at the very least be informed and proactive, and certainly to consider taking more risks. That may be a bit of a challenge, given that we will increasingly be talking about millennial generation investors who are wary about risks to start with, and who arguably will have less capital with which to invest. To obtain the same returns as their parents and grandparents though, they will clearly have to learn how be informed about the financial markets, and to be good savers as well.
MGI itself admits that its predictions are not written in stone and that a boost from technology or some other factor could make the future look considerably brighter for investors. Still, given that their reading of the megatrends is pretty much dead on, this might be a good time for everyone to take a good look at their portfolios and to make a vow to spend a little bit more time being involved in where their money goes. ‘Buy and hold’ may have worked for a time, but that time may well have come and gone.
Millennial women want to launch global careers but companies are missing the boat by not giving them what they want. That’s one of the most interesting points I found from reading the new study by consulting firm PwC on talent pool of Millennial women, published just in time for International Women’s Day, which is tomorrow
PwC surveyed 3,900 professional, millennial-aged men and women across 23 countries for their study The Female Millennial (everyone has slightly different boundaries for this, but PwC defines Millennials as those born between 1980 and 1995, so as a group they are now aged between their early 20s and mid-30s). Some defining characteristics of Millennial women emerged. As a group they are well-educated, and as well more confident than any generation before them. Like their male counterparts, they thrive on feedback and, despite their technological competence, want it face-to-face. They want evolved workplaces and they want work-life balance – but they also want global careers and the chance to work overseas. In fact, 71 percent of the surveyed Millennial women expressed a desire to work abroad at some stage in their careers. As PWc puts it, ‘female demand for global mobility has quite simply never been higher’.
So good to know right? After all, female millennials are a large and increasingly well-educated share of new talent, so it would only be good business to attract the best and the brightest of that group. If they want to work overseas, surely it would make sense to give them that opportunity. Unfortunately, the majority of companies seem not to be connecting the dots on that one. At the moment, 80 percent of international assignments are held by men, and only 20 percent by women. Women are glum about their prospects to do more . Only 56 percent of the surveyed women believed that they had equal opportunities to undertake international assignments, and only 77 percent of men thought that women had the same opportunities that they did on that score.
So what’s the problem? PwC calls it an ‘outdated view’ that say it is easier to move men than women. That boils down to the belief that women’s careers are usually the secondary ones so women who are part of couples in particular would be reluctant to move. For the professional women surveyed by PwC who were part of a couple, that would seem not to be the case. Of that group of Millennials, 42 percent earned a salary equal to their partner, and almost one quarter (24 percent) earned more. That means that just one third of the women surveyed earned less than their partner.
That the earnings power of professional women compared to men is so high internationally should not be a surprise. After all, we know that for years women have been increasing their educational attainment relative to men. That women in professional jobs who work full time are earning as much as their partners only makes sense. PwC did not go as far as asking young men whether they would be willing to relocate for their partner, but at the very least it apparently makes economic sense in many cases.
Global careers are not for everyone, but apparently they are something Millennial women want to at least consider. If companies want to attract and retain the best talent, perhaps it is time for them to consider giving them women what they want.