Hello again, Peter Zeihan here coming to you from Colorado with our holiday series on the workforce and economic trends and what’s going on in the global system. Today we’re gonna talk about two much aligned or much celebrated, based on your point of view, generations, specifically the millennials and the zoomers.
Now those of you who have been following me for some time are familiar with what a demographic pyramid looks like, how it goes in and out based on birth rates over the ages, the boomers are the largest generation we’ve ever had. They’re there in green, nice big chunky group. Their participation in the workforce has dominated what we consider are normal. Since the 1960s, when they started entering the workforce, we had a huge labor oversupply because of them in the sixties and seventies. And then we had a huge consumption boom in the seventies and eighties, because they were all coming of age at the same time.
Now they’re leaving the workforce in the 2020s, and we’re gonna be facing a profound labor shortage, but it’s not just about them anymore. Their children, the millennials are a very different cohort in many different ways. But because they’re a large generation, they are dominating what we think of as normal right now.
Now for a pros and cons to this, of course, everyone has their favorite millennial stereotype that they’re lazy, that they’re entitled. They got their first job at 27 that they think they’re gonna be CEO in three years, that their mom still drives them to work, assuming they show up, they sleep until 11.
You know, all these things are totally true for about half the millennials. About half the millennials do match the stereotype and they are an issue. There’s no question about that. But the other half do not match the stereotype.
The other half did everything that they were supposed to. They entered the workforce immediately upon leaving college. They never took an extended vacation and they worked their fingers to the bone. But from worker quality point of view, these two different groups of millennials are actually pretty similar because the millennials who did everything right, got screwed as they were coming of age. They were entering the workforce just as the 2008 to 2009 financial crisis hit, which meant that they were the last people in the door. So they were the first people who got fired, and they lost several years of prime constructive work experience that you normally get at the beginning of your career. They missed out on that for like three, four, five years at the same time that the lazy millennials were missing out on three, four or five years of work experience, by choice. So regardless of how you look at it, the millennials today are behind compared to every generation in the workforce that has come before.
They’ve missed out on up to a half a decade of formative work learning, which means they will never catch up. They will always be behind compared to the generations that have come before.
Now, there are a lot of them. They are by far the largest group in the workforce today. And thank God they’re there. Otherwise the retiring boomers would generate a pressure that I don’t know how we deal with. So they are contributing, but they’re contributing on the back foot. and they will always be like that.
Now there’s some other characteristics about the millennials that are worth discussing, unlike the boomers, and especially unlike gen X, the millennials have a reputation accurately for being very collaborative. So if there’s any work experience that requires multiple fingers in it, especially across multiple fields, the millennials are very good at integrating their diverse life experiences through diverse work experiences to contribute to a single product.
And then, the point in the American economic evolution that we are in today, this is great news cause we are seeing the fastest industrialization process going on in this country that we have ever had, even faster than World War II. Part of it’s the shale revolution that it pushed down energy costs. Part of it is the millennials themselves, which are now the largest consuming cohort in the world. Part of it is deglobalization, which is bringing manufacturing back. But if you take a group of people like the millennials who have good people skills, good at management, good at sharing and contributing in a time of change, this is exactly what we need. And the only downside about the millennials in this form is that they’re not a little bit older, so they’re not in senior management, but they can make things work in a dynamic fluid environment and not get stressed out about it.
And that’s fantastic.
The next generation down are the zoomers or gen Z. These are the kids of gen X, and they have a wildly different approach to everything compared to the millennials. First and most important is the difference in attitude towards everything, towards people, towards the workforce, towards their jobs, the millennials are willing to job out. They’re not loyal, but zoomers were raised by gen X, and gen X raised their kids with the general idea that you will never get anything from the government. We will always be outvoted by the larger generations, the millennials and the boomers. So you never get social security. You will never get Medicare. You will never get Medicaid. And so there is no point to collaborating with your peers because there isn’t going to be enough to go around. You don’t simply need to be better than them. You need to be better than everyone.
And that generates a radically different work ethic.
Unlike millennials who job hop, zoomers are desperate for an anchor. And so they will cut a deal with their employer to stay on forever so long as they have a leg up on everyone else.
They’re hyper competitive; this makes ’em very productive as members of the workforce at large, but it also sends ’em in a couple different directions. First of all, when you’re hyper competitive, you don’t want to be in a position where your outcomes are dependent upon someone else. So you don’t work well with others. They’re fairly antisocial. And the sort of mass touchy feely work that the millennials are capable of and competent at and famous for, the zoomers just can’t compete in that field. So anything that requires a team effort, management, blue collar work, construction, they just don’t do.
They just wanna lock themselves in a closet and code, which means this next generation cannot contribute to the sort of labor shortages that we’re seeing right now in trucking, in agriculture, in upper management, in finance.
They’re just not part of that scene whatsoever.
Think of it this way. Think of the famous fiction we’ve had in the last 20 years with the millennials. It was Harry Potter. You fly around on a broom, you play some really bizarre version of soccer. At the end of the day, you’re able to defeat the bad guy. Not because you’re smart or clever or a good planner, but because of who you are. And then there’s the zoomers. Their show is the Hunger Games. You fight each other to the death to see who gets to have lunch. It’s a different mindset.
Now this means that there are certain types of sectors that are going to be flooded with workers, anything that involves computer science. One on one interaction when one of the ones is a machine, technical work, software development, these are booming sectors.
These are things that the zoomers are gonna be good at. But if you’re talking like the staff for medicine, no, the staff for construction, no, any sort of management where there’s interaction with people, forget it. These guys wanna design systems that minimize their interaction with the rest of the world, not increase it.
Finally, a few closing comments about the general future of the workforce.
So we know that the boomers, the largest generation ever are retiring, taking their expertise with them. We know that gen X, a small generation, can’t possibly replace them. And we know that the zoomers down below are even smaller than gen X. So there is no midterm hope in terms of numbers to fill the gaps that we see and that the zoomers are very specific and this eye towards careers that they are after. So they’re not gonna be able to play a large scale, write large, and where we really have shortages, which means that most of our hope comes from the millennials, but not directly. Millennials, like the zoomers, like specific types of jobs of management, collaboration. They’re also not interested in things like blue collar work, but there is still hope because the millennials are a large generation, which means that their children will probably be an equally large generation. So the hope here for us getting back to something that we would consider normal isn’t gonna happen in six months or a year or five years or ten years. We have to wait for the millennials to have kids and for those kids to enter their twenties so that they can then fill out the workforce.
We’re looking at 2045. That’s the soonest that this situation might improve. So you, if you’re an employer, you simply have to figure out how to get by in this environment, because this is probably gonna be your new normal for the rest of your career. 25 years is a long time to wait to hire, but as bad as that sounds and it’s bad, it’s nothing compared to what the rest of the world is dealing with everywhere else.
The transition during the cold war-post cold war era because of industrialization and urbanization happened so much faster than it did in the United States. And so where we have these wibbles and wobbles between boomers and xers and millennials and zoomers, everyone else, it’s a much simpler story. It’s just a sharp drop off. A lot of these places went from living on the farm to living in the cities in a generation or two.
In the case of the Chinese, the entire transition happened in less than 40 years. For most of the world this demographic collapse is already well past the point of no return; it’s terminal. And as, as you can see with the Germans and the Japanese, their equivalent of the boomers move into mass retirement, there’s no one down below to pick up the slack.
So here in the United States, we have the millennials as a large generation, which provides us with a ballast now insufficient. Yes, but it’s still there. And their children will fill out the system down the line. That’s not gonna happen almost anywhere else. For most of the rest of the world. We are looking at an end of what we understand as a functional economic model.
So here it’s painful, it’s awkward, and we will grow through it. With everyone else. This is the end of the world that we know.
In the future, we’re gonna be talking about what’s going on in Ukraine with the Russians. We might touch on the Iranians a little bit. We’re gonna do other things with the demographic situation. Of course, there’s always something to talk about with China, China, China, China, China, China.