By John K. Paglia, PhD, MBA, CPA, CFA
Millennials – individuals born after 1980 – are reaching the workplace in record numbers. They comprise 25 percent of the workforce in the United States and will make up 50 percent of the global workforce by the year 2020.
These millennials represent a new breed of employees. A PricewaterhouseCoopers report, Millennials at Work: Reshaping the workplace, notes that because they were raised on and deeply impacted by rapid technological developments, “millennials… expect rapid progression, a varied and interesting career and constant feedback.”
But achieving this career progression and mobility – especially in light of the millennial culture and values – may be a challenge. There has been much attention lately on how those who are fortunate enough to have landed jobs in the last seven years remain stuck in the position they took right out of college. A recent report from Towers Watson shows four in 10 employees (41 percent) said they would need to leave their organization in order to advance their careers.
Even as hiring increases, too few positions include the potential for wage growth. The so-called “career ladder,” under which previous generations of workers were hired and then regularly ascended through the company, is missing the bottom rungs and has faulty steps up. There is little movement in the middle management jobs for those in their late 20s with some experience; jobs with upward mobility potential that opened up during the hiring uptick of the last few years have been filled by vastly more experienced professionals.
As a result, the modern reality for many millennials is limited internal job mobility, stagnant wages, and career drift – even as research suggests that career mobility is a top priority for millennials, ranked even higher than competitive salaries in a recent poll.
Now that they are making inroads in job creation, policymakers should turn their attention to policies that focus on robust wages and job mobility, to ensure that millennials are able to grow in their careers. These economic policies should focus primarily on small businesses, which offer the best pathway for millennials to achieve career mobility.
As the engine of job growth in our economy, small businesses are a natural vehicle for career mobility. Small business owners are, by nature, entrepreneurial risk-takers who recognize that the best way of keeping talent is nurturing talent. They are more likely to understand that employees who have opportunities to advance within their companies are generally more loyal, more motivated, and more likely stay with the employer longer.
Therefore, small business owners are generally very supportive of their employees pursuing outside skills, such as data analytics, and seeking greater education, such as an MBA, and are receptive to them taking on new responsibilities and moving up the ladder. Even if their millennial employees eventually change companies – a very real risk – they bring their new education, experiences and skills to their current workplace prior to departing.
To deliver these benefits to both millennials and to the small business community, policymakers should provide small business incentive funds to address the so-called “Valley of Death” – the early stage-funding gap, the critical point of development and growth for small businesses when potential new, high-wage, high growth jobs are created. Policymakers should continue to support initiatives such as those in the President’s 2014 SBA budget, including long-term investment capital, access to federal contracting, support for exporters, start-ups, veterans, and supply chains, and waivers on upfront and annual fees on all 7a small business loans of $150,000 or less.
Millennials, like previous generations, deserve their shot at healthy, robust careers. As they increase in numbers in the workplace, we must support the policies to help them succeed.
Paglia is Associate Dean of Fully Employed Programs, Associate Professor of Finance, and Director of Accreditation at Pepperdine University Graziadio School of Business and Management. He founded the award-winning Pepperdine Private Capital Markets Project, ongoing research investigating access to and demand for private capital among small to middle market businesses and the capital providers, lenders, intermediaries and affiliated others that serve them. @GraziadioSchool