2 Ways Companies Must Support the Millennial Generation
October 12, 2018
According to Pew Research and the Bureau of Labor Statistics, millennials (aged 22-37) make up 35% of the workforce. Another 5% is made up of the post-millennials (aged 16-21). This 40% of the workforce faces incredible challenges such as carrying high student loan debt and earning low salaries, both of which will make it more and more difficult for them to establish themselves, feel comfortable financially, let alone save for retirement.
This is not about millennials making poor financial decisions, spending money frivolously. For many of them, this is about significant student loan debt. According to CNBC’s MakeIt, the cost of a college education has risen 213% since 1988. In 1987, when I graduated from college, only a small percentage of my graduating class felt the need to head off to graduate school, a bachelor’s degree was enough to land a decent, well-paying job, but today that is not the case. More and more companies are requiring an advanced degree for lower level positions or to get promoted.
Since this group represents 40% of the workforce, companies need to be proactive and respond because this is a crisis. Specifically, there are two ways companies can step-up and support the millennial and post-millennial generations.
Student Loan Assistance/Tuition Remission
According to CNBC, the average student loan debt for Millennials is $42,000. In terms of a student loan payment, this equates to roughly $500 per month. While this may not seem like a lot, this is before they pay rent, utilities, transportation, or for food.
A small number of companies actually assist their employees with student loan debt by paying a portion of it on an annual basis. As of 2017, there were 17 companies who offered this benefit, among them are Aetna, Fidelity Investments, and Credit Suisse. There is a $10,000 cap for most of these companies. This is an excellent start, but 17 represents a minuscule number.
Many companies offer tuition remission, however, the American Council of Education as reported by the National Bureau of Economic Research estimates that roughly 20 percent of graduate students and 6 percent of undergraduates receive some financial support from their place of employment, which suggests it likely isn’t “most companies.” Companies that assist their employees with their student loan debt or offer tuition remission, know there are benefits to footing the bill for their employees education. First, employees tend to stick around longer, which reduces the cost of turnover, employees are generally happier, which makes them more productive.
The more companies that offer this benefit, the more likely they can drive down the cost of these tuition dollars down through MOUs and other agreed upon “group” rates. This becomes a beneficial relationship between employers and universities as well. And of course, it is a win win for the employee. I am not suggesting the company shoulder all of the financial burden, but reducing the burden for this generation of workers, and the generations that follow, will have a significant impact on the workforce and on our society by increasing financial security.
You may have seen the video of Amazon telling their employees their minimum wage was being increased to $15 per hour. The cheers were contagious. Amazon was praised by Bernie Sanders for their bold economic move. But this may have been a little bit more of a media stunt since many of those employees were going to subsequently lose bonuses. Since then Bloomberg reports Amazon has “ponied up more money” in response to the backlash. The average salary for a millennial, according to Smart Asset is a little over $35K. My point is this, according to the Economic Policy Institute, the average CEO salary is 271 times higher than the average worker. I’m not suggesting a CEO or other senior leaders not be well compensated. However, if you look at it this way, if a company with 500 average-paid employees (roughly $40K per year) and a CEO who is paid $15 million, paid the average workers an additional 10-15%, it would total around $3 million per year. The Wall Street Journal reported that the earning for S & P Companies jumped 23.5% in the three months ending in June 2018. Belts do not need to be tightened to increase the salary of the “average worker,” while still recording strong profits.
It comes down to one very simple idea – valuing human beings, our daughters and sons, nieces and nephews. I am not suggesting a socialist shift, I’m suggesting paying a reasonable and sustainable wage. I am suggesting corporate America offer benefits that truly benefit both the employee and the company. And I believe companies who stand up and lead the effort will be handsomely rewarded in the long run.
Anne Converse Willkomm
Assistant Clinical Professor
Department Head of Graduate Studies