Globally Millennials Face a Changing Economy and An Increasing Wealth Gap

In a recent lecture, Global Political Economist, Ian Bremmer, stated that the global economy is as troubling as he has seen it in his 25-year professional career.  Millennials in Western economies like the U.S., Germany and France are facing a growing wealth disparity and greater inequality than experienced in several generations.

This disparity, according to Bremmer and a research report (which included data from the U.S., Germany, France and Spain) predict this trend based on the following factors:

  • a widening income divide between college graduates and others;
  • an increasing disparity between those who inherit wealth from their parents v. others;
  • a changing global economy where social, economic and political models increasingly do not favor the middle class; and,
  • tax policies that favor those who inherit wealth or earn wealth based on investments.

An analysis by Credit Suisse points out that wealth is already unevenly distributed with the top 1% of the world owning more than half the world’s total wealth.  The report highlights a trend of increasing income disparity which appears to be the worst since World War II.  The report shows that millennials increasingly graduate with large student debt, inherit less from their parents, and have higher mortgages than in previous generations.  Thanks to technology however, a lucky few are spectacularly wealthy to a degree not seen in many generations.

College Education

It is well established that the difference between lifetime earnings of those who graduate college as opposed to those who do not can be hundreds of thousands of dollars.  Early in the game however, most college graduates are saddled with significant college debt repayments. Average college debt is almost $35,000, based on a 2015 study.  That is about twice the amount of college debt per graduate than experienced two decades earlier (adjusting for inflation).  College debt is now the largest national financial burden, only slightly behind consumer debt.

Less Inheritance

As if it were not bad enough for millennials to have debt burden at the beginning of their careers, for most, there will be no wealth boost in the form of inheritance. In the U.S. and France only 10% to 15% of people inherit anything from their parents before they are 40.  The data from Credit Suisse indicates that only about 50% of any generation inherits anything from their parents during their lifetime.

The report indicates that in the wealthiest industrialized countries those who are lucky enough to inherit, tend to inherit a lot.  In fact, inherited wealth averages about 40% of an individual’s total assets.  Indicators are that inheritances will increase as the previous generation, the baby boomer parents, have benefited from a strong economy and increased gains in stock market and real estate.

Global Political Factors

According to Ian Bremmer, the global political environment is as dangerous and troubling as he has seen in his career.  In the U.S. and Western Europe, the political environment is becoming increasingly polarized.  Not only is the polarization stifling the progress of legislation, the entire political infrastructure is failing the middle class at a troubling rate.  Bremmer claims we are in a global political recession, where the U.S. will continue to lose its standing as a world power and China will increasingly dominate the world economy.

The phenomenon will be concerning to many Americans who note that historically the U.S. has been attempting to “suggest” if not “force” its capitalist political structure on other countries.  Now the world faces a growing dominance of a communist controlled economy whose middle class and millennials are achieving radically increasing wealth while the opposite is true for Western economies.


As an employer, if you consider these factors when looking at total rewards and employee benefits, it almost becomes a responsibility to support a strong retirement program for your team.  To compound the problem, no significant knowledge of personal finance is taught in the schools, or even at the college and graduate level.  With limited financial literacy, many millennials do not fully understand the necessity to shed debt early and begin saving for a future that will not take care of them unless they take care of themselves.  401(k) policies for example, that escalate payroll deductions, include matching by the employer, and become automatically effective upon hire are important factors to consider given the future that a company’s workers will face.  We have had employers ask, “Why is this sort of thing our responsibility?”  The answer is, like it or not, employers are in a position of providing health coverage, as well as long- term financial support for the workforce based on the structure of the U.S. economy.  Moreover, it is a competitive necessity to offer these kinds of benefits in a world where there will be an increasing war for educated talent as technology and the pace of business continue to increase.

Paul Finkle, SPHR, CMC – Executive Vice President

Disclaimer: Some information contained herein has been abridged from numerous sources and may be protected by various copyright laws. Such information should not be construed as consulting or legal advice. Please contact our office for specific advice and/or referrals.

Bay Area Human Resources Services

Employers Should Review Harassment Policies in Wake of #MeToo Uprising

Unlawful harassment has recently become one of the most prominent employment issues, both in and out of the workplace. Although harassment in the workplace is not a new issue, the spotlight is much brighter as victims are becoming more emboldened to speak up and demand action. As more victims find their voices, this issue could continue to dominate news and companies may be faced with increasing complaints internally to human resources and externally to government agencies.

As result, employers would be wise to review their harassment policies and practices to ensure a proactive stance in protecting the company and mitigating potential issues.  Following are three general recommendations for employers to consider as they revisit their organizations’ existing anti-harassment policies.

Avoid Legal Definitions: Often policies quote regulations or definitions published by the Equal Employment Opportunity Commission (EEOC). The legal definition is fine for lawyers but, without more context, provides inadequate notice to employees. Ensure employees understand, in plain terms, what constitutes harassment with real-life examples of unacceptable conduct in your policy. Whereas policies are often written without this level of specificity, it is important to balance generalities with clear examples so that employees understand what is acceptable behavior and what is unacceptable.

Don’t Focus Only on What Is Prohibited: For harassment to be unlawful under federal law, it must be, among other factors, severe or pervasive. The more severe it is, the less pervasive it need be. The converse is also true. However, employers do not want to wait until conduct is unlawful before prohibiting (or responding to) it. The goal is to prevent and respond to harassing conduct before it rises to the level of illegality. Therefore, it is recommended that, within a policy, employers lead off the examples of prohibited conduct with something like: “The following behaviors are unacceptable and therefore prohibited, even if not unlawful in and of themselves.”

Increase Channels of Reporting and Decrease Fear of Reprisal: A compliant and strong anti-harassment policy is half the equation, but a robust complaint procedure is the other half. Employees must be confidant that they can report harassment both as potential victim or witness.  Employers must ensure that their policy truly encourages and empowers employees to come forward without repercussion.  If the workplace has rumors or “open secrets” about inappropriate behavior, companies should consider adding more reporting channels, enhancing investigation protocol, and detailing the range of remedial action that may be imposed for a violation.

Beyond a company’s policy, an employer should also address underlying workplace culture issues that could potentially be cultivating harassment. Does your company state a harassment-free policy, yet have executives or managers that belittle the required training or make excuses for their own bad behavior? Cultural change must start with buy-in at the top, whereby leaders at all levels are modeling appropriate behavior and promoting a workplace free of conduct that could be viewed as unacceptable. For example, the recent statement made by Satya Nadella , the CEO of Microsoft, removing the arbitration requirement for harassment claims for all employees, sends a strong message of intolerance of harassing behavior.

In addition, employers may want to consider updating training programs that go beyond meeting any state required obligations.  If the present training schedule is meeting mandatory manager training every two years, companies may want to consider increasing the frequency of training for managers, enhancing the content of training and beginning training for all employees, not solely managers.

As with any workplace policy or procedure, ABD SharedHR is here to provide consultation on policy development and training needs.

Brandi Gordon, SPHR – Senior HR Consultant

Disclaimer: Some information contained herein has been abridged from numerous sources and may be protected by various copyright laws. Such information should not be construed as consulting or legal advice. Please contact our office for specific advice and/or referrals.

Bay Area Human Resources Services