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Generation Rent: How Millennials are Fueling the Rental Economy

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It’s long been said that millennials have the power to disrupt and reshape entire industries.

Most recently, this effect has been seen in the retail landscape, where millennial spending habits are setting the tone for the market’s future.

Not only does the millennial generation demand the convenience of making instant purchases—but they can now rent almost anything they want, anytime, and anywhere.

Visualizing the Growth of the Rental Economy

Today’s infographic from Adweek takes a deeper look at the consumer goods rental economy, and the potential long-term impact of this shift in buyer behavior.

Although the current market for rentals is still in its early stages, the sheer momentum that the industry has gained in the last year is enough to threaten even the largest retailers—forcing them to reconsider their own business models.

millennial generation renting

The data for the visualization above comes from market research company Lab 42. In a survey of 500 people, they found that 94% of the U.S. population has participated in the sharing economy in one way or another.

While the sharing economy spotlight typically shines on global behemoths like Airbnb and Uber, the research used to populate this infographic focuses on renting consumer goods for a short period of time, as a sub-segment of the sharing economy.

The Renting Revolution

Offerings within the rental sector have exploded over the last decade, with furniture being the number one category that consumers rent.

According to the infographic, reasons for renting furniture include:

  • Temporary housing: 45%
  • Expensive upfront costs: 43%
  • Testing products before committing: 41%
  • Hosting events at home: 35%
  • Moving into a new home: 29%
  • Redesigning a house: 27%

Other products that consumers rent include gaming systems, clothes, tools, and technology. Female renters are more likely to rent furniture, clothes, and jewelry, while male renters are more likely to rent tools and gaming systems.

Renting goods is predominantly done on an as-needed basis. The Lab 42 report states that for clothing, 77% of respondents indicate that they either rent, or would rent for a formal event.

The End of Ownership?

Despite the common misconception that millennials are driven by emotional needs, the reasons behind why they rent consumer goods are much more pragmatic.

  • Test things before purchasing: 57%
  • Need a temporary solution: 55%
  • Need an item or a service for a short time-frame : 52%
  • Less expensive than buying: 43%
  • More convenient than buying: 42%

Further, only 6% said that they rent because they do not like owning things. This tells us that the rental economy does not indicate the end of ownership, but rather, provides a strategy for consumers to try before they buy.

Attitudes Towards Sustainability

According to the research, very few millennials choose to rent consumer goods because it is better for the environment. However, Nielsen claim that 73% of millennials are willing to pay more money for sustainable offerings—impacting both retail and rental industries.

As evidence of this, Ikea will test a range of subscription-based leasing offers in all 30 of its markets by 2020 in a bid to appeal to environmentally conscious consumers and boost its sustainability credentials. If Ikea’s evolving business model is a success, it could open the floodgates for others to follow suit.

A Promising Market

In the clothing rental space, brands like Rent the Runway pave the way, but there has also been an explosion of startups entering the market in the last year.

One example is the monthly subscription service Nuuly. The company offers consumers access to over 100 third-party brands and vintage items. Consumers can borrow up to six items a month for $88. Similarly, American Eagle’s Style Drop program rents out the latest collections for a flat monthly fee of $49.95.

As more companies incorporate short-term rental services into their offerings, more millennials will shift their behavior from buying to renting—disrupting the traditional retail business model as we know it. With that being said, the impact of millennials having it all, and owning none of it, is yet to be determined.

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Demographics

Ranking U.S. Generations on Their Power and Influence Over Society

Using data from our new Generational Power Index, we look at how much economic, political, and cultural power each U.S. generation holds.

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Which U.S. Generation has the Most Power and Influence?

We’re on the cusp of one of the most impactful generational shifts in history.

As it stands, the Baby Boomers (born 1946-1964) are America’s most wealthy and influential generation. But even the youngest Boomers are close to retirement, with millions leaving the workforce every year. As Baby Boomers pass the torch, which generation will take their place as America’s most powerful?

In our inaugural Generational Power Index (GPI) for 2021, we’ve attempted to quantify how much power and influence each generation holds in American society, and what that means for the near future.

Download the Generational Power Report (.pdf)

The Generational Power Index

Generation and Power, Defined

Before diving into the results of the first GPI, it’s important to explain how we’ve chosen to define both generations and power.

Here’s the breakdown of how we categorized each generation, along with their age ranges and birth years.

GenerationAge range (years)Birth year range
The Silent Generation76 and over1928-1945
Baby Boomers57-751946-1964
Gen X41-561965-1980
Millennials25-401981-1996
Gen Z9-241997-2012
Gen Alpha8 and below2013-present

The above age brackets for each generation aren’t universally accepted. However, since our report largely focuses on U.S. data, we went with the most widely cited definitions, used by establishments such as Pew Research Center and the U.S. Federal Reserve.

To measure power, we considered a variety of factors that fell under three main categories:

  • Economic Power
  • Political Power
  • Cultural Power

We’ll dive deeper into each category, and which generations dominated each one, below.

Overall Power, By Generation

Baby Boomers lead the pack when it comes to overall generational power, capturing 38.6%.

GenerationOverall Power Share
The Silent Generation12.8%
Baby Boomers38.6%
Gen X30.4%
Millennials14.5%
Gen Z3.7%
Gen Alpha0.0%
Total100.0%

While Boomers hold the largest share of power, it’s interesting to note that they only make up 21.8% of the total U.S. population.

Gen X comes in second place, capturing 30.4% of power, while Gen Z ranks last, snagging a mere 3.7%. Gen Alpha has yet to score on the ranking, but keep in mind that the oldest members of this generation will only be eight years old this year—they haven’t even reached double digits yet.

Generational Power: Economics

Considering that Baby Boomers hold nearly 53% of all U.S. household wealth, it makes sense that they dominate when it comes to our measurement of Economic Power.

Economic Generational power

At 43.4%, the GPI shows that Boomers hold more economic influence than Gen X, Millennials, and Gen Z combined. They make up a majority of business leaders in the U.S., and hold 42% of billionaire wealth in America.

Timing plays a role in the economic prosperity of Baby Boomers. They grew up in a post-WWII era, and spent their primary working years in a relatively stable, prosperous economy.

In contrast, Millennials entered the workforce during the Great Recession and have seen only tenuous economic and wage growth, impacting their ability to accumulate wealth. Combine this with crippling amounts of student debt, and it’s no surprise that Millennials have nearly 50% less wealth than other generations (Boomers, Gen X) at a comparable age.

Generational Power: Political

In addition to holding the most Economic Power in the GPI, Baby Boomers also rank number one when it comes to Political Power.

Political Generational Power
Boomers capture 47.4% of political influence. This generation accounts for 32% of all U.S. voters, and holds the majority of federal and state positions. For instance, 68% of U.S. senators are Baby Boomers.

Political spending on election campaigns and lobbying predominantly comes from Boomers, too. When it comes to money spent on lobbying, we found that 60% of the top 20 spenders were from organizations led by Baby Boomers.

In contrast, Millennials and Gen Zers barely make a splash in the political realm. That said, in the coming years, it’s estimated that the combined voting power of Millennials and Gen Z will see immense growth, rising from 32% of voters in 2020 up to 55% by 2036.

Cultural Power

There is one category where other generations gave Boomers a run for their money, which is in Cultural Power.

Cultural Generational Power

In this category, it’s actually Gen X that leads the pack, capturing 36.0% of Cultural Power. Gen X is especially dominant in press and news media—over half of America’s largest news corporations have a Gen Xer as their CEO, and a majority of the most influential news personalities are also members of Gen X.

Despite a strong showing in our culture category, Gen X falls short in one key variable we looked at—the digital realm. On digital platforms, Millennials dominate when it comes to both users and content creators, and Gen Z has growing influence here as well.

The Future of Generational Power

Generational power is not stagnant, and it ebbs and flows over time.

As this process naturally plays out, our new Generational Power Index and the coinciding annual report will aim to help quantify future shifts in power each year, while also highlighting the key stories that exemplify these new developments.

For a full methodology of how we built the Generational Power Index, see pages 28-30 in the report PDF. This is the first year of the report, and any feedback is welcomed.

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Markets

Charted: The Gen Z Unemployment Rate, Compared to Older Generations

COVID-19 has impacted everyone, but one generation is taking it harder than the others. This graphic reveals the Gen Z unemployment rate.

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gen z unemployment

Putting the Gen Z Unemployment Rate in Perspective

There are more than 2 billion people in the Generation Z age range globally. These individuals, born between 1997 and 2009, represent about 30% of the total global population—and it’s predicted that by 2025, Gen Z will make up about 27% of the workforce.

Due to the global pandemic, unemployment has been on the rise across the board—but Gen Z has been hit the hardest. This chart, using data from the OECD, displays the difference between the unemployment rate for Gen Zers and the rate for older generations.

Note: The OECD defines the ‘unemployed’ as people of legal working age who don’t have work, are available to work, and have taken steps to find a job. The final figure is the number of unemployed people as a share of the total labor force.

The Generation Gap: Gen Z Unemployment

Compared to their older working-age counterparts, Baby Boomers, Gen X, and Millennials (Gen Y)—the most recent 2020 data shows that Gen Z has an unemployment rate of nearly 2x more in almost every OECD country.

CountryUnemployment Rate (Gen Z)Unemployment Rate (Millennial, Gen X, Boomer)
🇦🇺 Australia14.3%5.0%
🇦🇹 Austria10.5%4.7%
🇧🇪 Belgium15.3%4.8%
🇨🇦 Canada20.0%7.9%
🇨🇱 Chile24.8%9.6%
🇨🇴 Colombia27.5%13.9%
🇨🇿 Czech Republic8.0%2.3%
🇩🇰 Denmark11.5%4.7%
🇪🇪 Estonia17.7%5.9%
🇫🇮 Finland21.0%6.0%
🇫🇷 France20.1%6.8%
🇩🇪 Germany6.2%4.0%
🇭🇺 Hungary12.4%3.5%
🇮🇸 Iceland11.9%5.5%
🇮🇪 Ireland15.2%4.4%
🇮🇱 Israel7.9%3.7%
🇮🇹 Italy29.1%-
🇯🇵 Japan4.5%2.6%
🇰🇷 South Korea10.5%3.6%
🇱🇻 Latvia14.8%7.7%
🇱🇹 Lithuania19.5%7.7%
🇱🇺 Luxembourg22.4%5.6%
🇲🇽 Mexico8.0%3.8%
🇳🇱 Netherlands9.1%2.8%
🇳🇿 New Zealand12.4%3.3%
🇵🇱 Poland10.9%2.6%
🇵🇹 Portugal22.9%5.9%
🇸🇰 Slovakia19.3%6.0%
🇸🇮 Slovenia14.2%4.3%
🇪🇸 Spain38.3%14.0%
🇸🇪 Sweden23.8%6.4%
🇨🇭 Switzerland8.6%4.3%
🇬🇧 United Kingdom13.5%3.2%
🇺🇸 United States15.1%7.1%

Note: For the purposes of this article, we are only considering the Gen Zers of legal working age—those born 1997-2006. The rest—Baby Boomers, Gen X, and Millennials—are those born between 1946–1996.

The timing for the youngest working generation could not be worse. Gen Z is just beginning to graduate college and high school, and are beginning to search for work and careers.

Gen Z is also an age group that is overrepresented in service industries like restaurants and travel–industries that were equally hard hit by the pandemic. In the U.S., for example, around 25% of young people work in the hospitality and leisure sectors. Between February and May 2020 alone, employment in these sectors decreased by 41%.

Countries like Spain are facing some of the biggest headwinds among OECD countries. The country already has a high unemployment rate for those aged 25-74, at 14%. But the unemployment rate for Gen Z is more than double that, at over 38%.

Implications For the Future

While it may be true throughout history that this age group is often less employed than older cohorts, the share of labor held by those aged 15-24 dropped significantly in 2020.

labor share gen z

Note: This chart represents the data from G7 countries.

In terms of their future employment prospects, some economists are anticipating what they call ‘scarring’. Due to longer periods of unemployment, Gen Z will miss out on formative years gaining experience and training. This may impact them later in life, as their ability to climb the career ladder will be affected.

Starting out slower can also hit earnings. One study found that long periods of youth unemployment can reduce lifetime income by 2%. Finally, it is also postulated that with the current economic situation, Gen Zers may accept lower paying jobs setting them on a track of comparatively lower earnings over their lifetime.

Overall, there are many future implications associated with the current unemployment rate for Gen Zers. Often getting your foot in the door after college or high school is one of the hardest steps in starting a career. Once you’re in, you gain knowledge, skills, and the oh-so-coveted experience needed to get ahead.

The Kids are Alright?

One positive for Gen Z is that they have been found to be more risk averse and financially conscious than other generations, and were so even prior to COVID-19. Many of them were children during the 2008 Recession and became very cautious as a result.

They are also the first digital generation— the first to grow up without any memory of a time before the internet. Additionally, they have been called the first global generation. This could mean that they pioneer location-independent careers, create innovative revenue streams, and find new ways to define work.

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