Millennials and the Platform Economy
The emergence of the platform economy in the past decade has coincided with the maturation of large numbers of millennials into adulthood. Both millennials and the platform economy are emerging in ways that will shape the future economy for decades. As Millennials are becoming an increasing part of the adult population; how does the platform economy impact their path to economic independence?
Photo courtesy of Elizabeth Hahn via Flickr.
With millennials having fewer assets than their generational predecessors due to staggering student loan debt and tepid job prospects, the platform economy has served millennials by providing convenient access to services, without requiring expensive ownership. In addition to and perhaps because of the challenge of expense, millennials are less likely to value big purchases like cars, homes, and TVs. With the platform economy, for example, millennials can have the benefit of a car, through Zipcar or Uber, without amassing the debt incurred by car ownership.
In addition, the platform economy provides not just more flexibility than traditional work, but job opportunities for a generation that has struggled to find full-time work and values a work-life balance. Those in the millennial age group are the most likely to participant in the platform economy, with more than 40 percent of participants in online labor and online capital platforms are between ages 18 to 34. And they appear to enjoy using and working in the platform economy. Millennials have an overwhelmingly favorable view of the platform economy, with 74 percent of millennials having a favorable impression and only 8 percent saying they have an unfavorable impression.
Millennial workers and users of platform economy services distinctly benefit from it. But the platform economy does little to address the deeper shortcomings millennials face, including the related challenges of income volatility and asset accumulation. As well, young people are also the most likely age group to experience major monthly changes in income. For example, 70 percent of 18 to 24 year olds have experienced more than a 30 percent month to month change in total income. This income volatility can make it hard for millennials to accumulate assets and prepare for a strong economic future.
Although millennials are the most likely to participate in the platform economy, this emerging economy is not universally beneficial to millennials. For example, many more millennials than those in previous generations at their age do not have the assets like cars and houses to capitalize on the new sharing economy. In fact, millennials account for the “biggest driver of the decline in homeownership, and the wealth of households headed by someone under the age of thirty-five is down 41 percent from where it was for the same type of households in 1995.”
Without large assets like savings and home ownership, millennials find it harder to start businesses, which benefit from initial capital and the ability to borrow. According to Reid Cramer of New America:
“Without steady jobs, many of these young entrepreneurs take on temporary work, in effect creating a “Gig Economy,” characterized by a small, and less powerful, form of entrepreneurship that ends up supporting one job at a time and fails to spark the benefits we traditionally associate with small business creation.”
As millennials continue to engage with the platform economy, this emerging economic trend has the potential to both help and hinder millennials as they seek economic independence. It remains to be seen whether the short term benefits will outweigh the long term challenges.
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 The Millennial cohort is roughly defined as being born between 1980 and the new millennium, according to the Pew Research Center.