Nov. 5, 2019

Moore School finance clinical assistant professor Jimmie Lenz researches how the monetary habits of millennials are affecting the United States’ economy.

Lenz has been an adjunct professor at the Moore School for the past few semesters, so he is excited to join the faculty full-time as a professor for fall 2019.

Lenz has two main areas of millennial research. Millennials are Americans born between 1981 and 1996. The first is millennial debt. According to Lenz’s research, they collectively owe more than $1 trillion in debt. The other focus of Lenz’s research is millennials’ changing perspective on home ownership and how this impacts the nation’s larger economy.

“These topics affect, in a very real way, the environment in which we live, work and plan,” Lenz said.

Through his research, Lenz has ascertained that millennial behavior directly reflects the unstable socioeconomic environment they were raised in. They experienced monumental technological advances, a global financial crisis, public health epidemics and more than two decades of U.S. military activity. These events have instilled a sense of caution in millennials that translates to their financial decisions.

Lenz compared millennials’ monetary habits to those of the older, more financially precarious Generation X. He found that millennials have less mortgage debt and credit card debt than the former generation.

“Given the behavior of previous generations, it seems that this lower [debt] reflects millennials’ more risk-averse approach to their finances,” Lenz said.

Millennials witnessed Generation X struggle with job market instability, so they, as a group, are more committed to higher education. Therefore, the majority of millennial debt is in student loans, according to Lenz’s research. Unsurprisingly, this generation is taking on more student loan debt as the cost of attending college has exponentially increased over the past two decades.

“Another significant departure in this generation’s spending behavior is that millennials are delaying when they enter the housing market as homeowners and take on the associated debt of owning a home,” Lenz said.

Student loan debt, another area of Lenz’ research, was cited in the 2019 Federal Reserve report as a direct reason that millennials are delaying home ownership, he added.

However, millennials are also making the conscious decision to save more money for retirement than previous generations did. Tying their money up in savings leaves fewer assets to purchase homes.

These all seem like fine decisions for millennials; however, Lenz reminds people that the housing market is a huge source of national monetary reserves, so this change in behavior has the potential to directly affect the country’s gross domestic product (GDP), which is a method used to measure the value of goods and services produced in a specific time frame and place (e.g., annually for the United States).  

“If a long-term behavioral change is afoot, and this generation continues not to buy homes, it will very directly impact [the overall economy],” Lenz said.

However, millennials’ behavior is having another effect on real estate, specifically the prices in specific areas. Lenz’s research, on a county level basis, has concluded that changes in home prices can be tied to where millennials choose to migrate and where they choose to leave.

Lenz suggests that the criteria for financial success must be reevaluated when assessing younger generations.

Millennials are focused on long-term success instead of short-term returns; they are investing more in their futures and less on short-term accumulations. From a purely monetary standpoint, this depicts millennials as worse off if viewed solely in terms of their assets.

“But I contend that [money does not make up] the whole story,” Lenz said. “Millennials have emphasized post-secondary education, resulting in less time in the work force than their Generation X counterparts. Given this choice of education over employment, the net worth figures are quite logical.”

Basically, millennials have different priorities than previous generations did. Alongside their priorities, millennials also understand competitive jobs require more education.

Lenz said he is excited to bring this knowledge into the classroom. He looks forward to interacting with millennial and Generation Z students in the Moore School.

It is with this research in mind that Lenz gives his students some advice: “Embrace change; it is a constant and will allow you to keep learning forever.”

-Erin Mooney