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What We Know About Millennials is a Myth

Over the past year, several studies into the generation of young adults in the workforce have found that the so-called Millennials may not be so different from their generational predecessors. The children of the Baby Boomers, these young people were born between 1980 and 2000 and they number even more than the Boomers, which had been the largest demographic cohort born in America up to that point.

With more buying power and political clout, Millennials were viewed with great interest by businesses that wanted to attract their consumption and employ them. In the mid-2000s, as the first of this generation reached adulthood, there appeared to be striking differences between the expectations of the Millennials and those of the previous generations. Kids who grew up in the last 30 years knew only the digital world. The Internet was their encyclopedia and their entertainment medium. Sustainable living was a given. And they seemed to think that they could change the world, even at such a young age.

While there will inevitably be differences between the assumptions that people raised thirty years apart will make about the world, much of what was held up as different about the Millennial generation isn’t all that different, or even all that true.

“One thing that struck me was how similar the values were across the generations,” says Sabine Hoover, content manager for FMI Consulting and the co-author of Millennials in Construction: Learning to Engage a New Workforce. “Think of when you were young. You’re energetic. You want to change the world. That changes as we age. Because the Millennials are so large we’re just more aware of those values in them.”

FMI’s study was one of several that have shown that many of the preconceptions that were popularly held about 18 to 35 year olds may be misconceptions. FMI surveyed 369 people – including 201 Millennials – in the construction industry in the spring of 2015 to find out about their level of workplace engagement. What they found was that young workers are seeking the same kinds of engagement and are willing to make the same commitments as Generation X or the Baby Boomers with whom they work. If you’re surprised by that result, you’re not alone.

“I was very surprised. The first time I saw the results I went back to the analyst and made him run it again,” laughs Hoover. “It was very encouraging. I started looking at other studies for similar results and found ours wasn’t the only one.”

A year earlier, IBM Institute for Business Value had conducted a study of those born between 1980 and 1993 in the workplace. Their findings were similar to FMI’s and, in fact, they labeled the results “myths, exaggerations and uncomfortable truths.” The five myths IBM revealed were:

  • Millennials career goals and expectations are different than those of other generations
  • Millennials want constant acclaim and think everyone should get a trophy
  • Millennials are digital addicts who want to do everything online.
  • Millennials can’t make a decision without asking everyone to weigh in.
  • Millennials are more likely to jump ship if their workplace doesn’t meet expectations.

The IBM study found that Millennials goals were within one to three points of the previous generations. They valued transparency and ethics over recognition from a boss (35 percent to 29 percent). Millennials listed their top three learning preferences and all were physical rather than digital (conferences, classroom training and working alongside an experienced colleague). While 56 percent of Millennials said they would seek input before deciding, 49 percent of Boomers said the same thing and 64 percent of Gen X-ers sought input. And their top reason for leaving their job was the same as Baby Boomers, with 42 percent of each saying they would leave for more money and a more creative workplace. More than seeming like a divergent new group of workers, the younger generation sounded a lot like the Baby Boomers.

“Most of the Millennials have Boomers for parents, so it’s not surprising that they would have the same values,” notes Hoover.

Also in 2014, global real estate service firm CBRE how the generational expectations were changing the workplace. In response to what was obviously a significant workplace design trend – the shift to open, collaborative plans – CBRE sought to see how much the preferences of the Millennials was driving this new way of working. Like IBM and FMI, CBRE discovered that younger workers wanted to work like their older colleagues.

CBRE found that Millennials were looking most for space to think and create, ahead of space to meet and collaborate. Millennial respondents were the most likely to seek more time to collaborate but only by a 51 to 49 margin compared to Baby Boomers. But Boomers were half as interested in more formal meetings (27 to 54 percent) and much more interested in connecting via social media than Millennials. Younger workers preferred to do more work by email than Boomers or Gen X-ers but only one in three responded that way.

Understanding how the younger generation thinks about work has taken on greater urgency. For one thing, 2015 marked the point in time when more Millennials were alive than Baby Boomers. In 2015, workers under the age of 35 made up 34 percent of the workforce; that same generation of workers will comprise more than half the workers in 2025. Moreover, attracting and retaining talent has become a higher priority issue for businesses. This is especially true for construction industry businesses, which face a bigger potential shortage in workers. What FMI concluded in their study is that Millennials offer a great opportunity to the construction industry and that engagement was the key.

Construction has a smaller share of younger workers than other industries, yet its challenges appear to be the kinds that the 18 to 35 year olds want to solve. There are some key attributes about construction that are especially attractive to Millennials: the uniqueness of one project from another, the need for creative solutions and collaboration, and the key role of communication. Millennials bring new qualities to the construction workforce, which would be of great benefit to the industry. They look to technology for solutions and expect that problems can be solved. FMI also found that the attitudes and preferences of Millennials tune well to construction’s strengths. What the consultant found missing was a consistently engaging atmosphere.

The key findings of the FMI survey were that Millennials are motivated as much by financial and career security as previous generations. That’s not surprising given that the financial crisis may have defined the start of their careers. Millennials also expressed a willingness to work beyond their job requirements and an interest in being challenged at work that exceeded the responses of other generations. Most striking was the fact that 92 percent of the Millennial generation responded that they expected to stay five years or more working at a place where management demonstrated a sincere interest in their well-being.

FMI’s key findings were:

  • Having a defined and well-communicated vision is critical to engaging Millennials long term.
  • Millennials are eager to be challenged and ready to go above and beyond to make their companies succeed.
  • Having clear career advancement opportunities in place is the key to engaging people long term across all generations.
  • Engagement starts at the top.
  • For Millennials, money counts.
  • Millennials in construction want to push the envelope and drive innovation.

The problem, as FMI sees it, is that construction is an industry where these kinds of engagement conversations have regularly happened. Most construction companies – be they contractors, architects or supply chain – aren’t large corporations; often the companies are closely-held small businesses. Construction is a results-oriented, project-focused business. What it will take to attract and hold onto more of the younger generation is a change in the rules of engagement.

Millennials ranked a company’s commitment to social responsibility low in priority but put personal development third, behind competitive pay and work/life balance. Business owners will need to have more conversations about how they see a young employee’s career mapping out and how the employee can develop. Millennials won’t be as motivated by the thought of working hard to become a senior project manager as they will by the opportunity to contribute to the company’s success now. That means involving them in project meetings that they might not need to attend and listening if they have input. It means checking in with them and giving them feedback in a direct but positive way.

“The big takeaway for me was how important culture was,” says Hoover. “Regardless of the industry, if you have a strong culture – a leader who can inspire people, who cares – it’s impossible to underestimate the importance of that culture to young workers.”

Millennials are just as motivated by challenging work as those from older generations.

By: Jeff Burd

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National Construction Outlook – Winter 2016

As the seventh year of economic expansion begins in the U.S., expectations for gross domestic product (GDP) in 2016 are in line with a mature economic cycle. In a growth environment of just under three percent, however, economists forecast continued strength in hiring and for construction spending to increase at a rate that is three times the rate of GDP growth in 2016.

Observers whose forecasts reflect a weak outlook for the global economy are predicting GDP growth of 2.4 or 2.5 percent for the U.S. economy in 2016. Most economists see the strong employment market, more rapidly rising personal incomes and low costs of credit – even with the first interest rate increases – as factors that will encourage consumer and business spending in 2016. That school of thinking is driving the majority of forecasts to look for GDP growth of 2.7 or 2.8 percent in the U.S. And most forecasters continue to be fooled by the strength of job creation as the recovery grows long in tooth.

New hiring in October and November exceeded the expectations of virtually all economists, especially on the heels of slowing job creation in August and September. Bureau of Labor Statistics (BLS) reported on December 4 that hiring increased in November by 211,000 jobs. That report came on the heels of 298,000 new jobs in October. In addition to the higher-than-expected November number, BLS revised both October and September – which was weaker – upwards by 35,000 jobs. The improved hiring pace lifted the monthly average to 210,000 new jobs per month for the full year of 2015, a pace that is again higher than forecasted.

The strength of the job market helps to explain why construction spending is significantly higher. At a November 19 seminar held at GreenBuild in Washington, DC, economists for the Associated General Contractors (AGC) and American Institute of Architects (AIA) gave their forecasts for 2016 and 2017.

Kenneth Simonson, chief economist for the AGC, noted that construction in 2015 was significantly stronger than expected. Through that date, construction spending was up 14.1 percent year-over-year, with residential construction still very strong well into a period of recovery. Although the multi-family sector was up 27 percent and single-family was up 13 percent year-over-year, Simonson saw that trend peaking in 2015 with both segments of residential construction slowing to between five and ten percent in 2016. Simonson’s forecast for 2016-2017 is for six to ten percent increases in nonresidential construction. He sees office construction as the strongest building type, with growth in construction of educational and healthcare facilities at or above five percent. Notable among the weaker sectors will be hotels and manufacturing, which Simonson predicts could decline by as much as ten percent.

AIA’s Kermit Baker estimated that total nonresidential construction would end the year 2015 up 8.9 percent and forecasts that nonresidential construction would see similar growth, rising 8.2 percent, in 2016. Baker, the AIA’s chief economist and senior research fellow at the Joint Center for Housing Studies of Harvard University, explained that the prevailing trend in the AIA’s Architectural Billing Index (ABI) was positive. The ABI has been above 50 – meaning more firms experienced increased billing – most of 2015, including three of the past four months. Moreover, Baker noted that architectural backlogs have climbed from 4.2 months in 2011 to 5.6 months in 2015. Both of these signals indicate that construction activity should be strong through at least summer of 2016.

One business cohort that appears to agree with the predictions of Simonson and Baker is the so-called Middle Market. The National Center for the Middle Market (NCMM) is a research effort in collaboration with Ohio State University and GE Capital that surveys the behavior and attitude of businesses that have between $10 million and $1 billion in annual revenues. These companies comprise only three percent of the total number of businesses but employ one-third of all U.S. workers and comprise nearly one-third of U.S. GDP. As of the third quarter of 2015, the businesses in the Middle Market were experiencing steady growth at a faster pace than the U. S. overall but were feeling more cautious.

According to the NCMM’s Middle Market Indicator, growth of Middle Market companies has been 7.2 percent over the past 12 months, which has spurred employment growth of 4.1 percent. As these companies look forward, however, their forecasts are for growth to slow to 4.1 percent over the next year, with employment gains slowing to 3.2 percent. Only 49 percent expect revenues to rise in the coming year, compared to 64 percent who felt revenues would rise in fall of 2014. Slightly more than one in three expects to add jobs in the next 12 months, although those planning to invest capital were still at 61 percent, down only two points from last year.

It appears that most of caution comes from the slow overseas markets. When surveyed, the Middle Market companies showed 81 percent confidence in their local markets and 72 percent confidence in the U.S. market, but only 49 percent expressed confidence in the global markets.

Conditions in the Eurozone have strengthened, with third quarter real GDP growth at 1.7 percent. That’s the best year-over-year growth since 2011; however, the real GDP growth rate for European Union nations is still weak by historical standards and is well below the pre-recession peak in 2008. With fewer headwinds and internal crises, the Eurozone is not the drag on the global economy it represented just 12 months ago. The main threat to the U.S. economy that Europe poses is the distinct possibility that the European Central Bank will ease monetary policy further to boost growth above anemic rates, a move that will strengthen the dollar and make exporting tougher for U.S. manufacturers.

For 2016, the drag on the global economy will come from the so-called BRIC countries – Brazil, Russia, India and China – that fueled the global boom in the mid-2000s.

Brazil’s political paralysis and poor infrastructure are outweighing its economic potential. Low oil prices are hurting Brazil and making life even more difficult for Russia, which is also struggling with Western sanctions. China’s slowing growth rate looks to decline further in 2016 and the threat of major asset bubbles remains. Only India among the BRIC nations can boast continued strong economic growth, but its relative size and more limited trade ties mean India’s economy won’t offset the slowing Chinese growth.

Industrialization of previously underdeveloped economies has slowed, meaning that global economic growth is more likely to hover near the long-term historical average of three percent during the next few years.

The biggest negative impact on the U.S. from sluggish global economic growth continues to be on manufacturing. November’s ISM manufacturing report showed that activity fell below the breakeven point for the first time in several years. Manufacturing activity rose only 1.7 percent and the ISM survey dipped to 49.6. As in recent months, declining activity was due to continued inventory depletion and weak exporting. The latter is a result of both weaker global demand and the relative strength of the U.S. dollar.

U.S. manufacturing is also hurt by the slowdown in oil and gas exploration triggered by the 50 percent price decline in summer 2014. Lower energy costs are having a salutary effect on the consumer and on energy-dependent manufacturing, however, and the International Energy Agency (IEA) is forecasting that demand for energy will climb in 2016.  The IEA predicts that markets should be more stable for energy pricing – not necessarily great news for producers. Its outlook for oil pricing is for $60/barrel conditions in the next couple years, with gradual price increases to the $80/barrel level in 2020. The IEA also makes a persuasive argument for prices to remain at $50/barrel into the 2020s.

Assuming that the five-year outlook for oil doesn’t shift dramatically – never a good assumption – the forecast should mean that the U.S. economy can rely on having cheaper energy but lower contributions to GDP growth from the energy sector.

For a change there was good news from Washington, where Congress and the President were able to come to an agreement on the budget and debt ceiling this past month that will allow defense and discretionary spending to rise modestly in 2016 and also push any fight over the debt ceiling past the election into 2017. With the budget deal in place, government spending is poised to rise at its strongest pace in seven years in 2016 and will likely boost real GDP growth by 0.3 percentage points.

Congress also passed the first comprehensive transportation bill since 2005. The Fixing America’s Surface Transportation (FAST) Act of 2015 was signed into law on December 4, providing $305 billion over the next five years. The final bill fell short of the $400 billion that administration officials felt would be needed to avoid falling behind traffic growth but the law provides states with assurance about the federal contribution towards infrastructure repairs.

Data on construction spending at the end of 2015 supports the optimism that economists like Ken Simonson and Kermit Baker expressed about 2016. The Census Bureau’s report on October construction spending showed total activity at a record $1.107 trillion, the fifth consecutive month above $1 trillion. Private spending topped $800 billion, an increase of 15.9 percent year-over-year, with the investment split evenly between residential and nonresidential construction.

The Census Bureau reported on December 16 that housing starts in November were at a seasonally adjusted annual rate of 1,173,000. That is 10.5 percent higher than October and 16.5 percent higher than November 2014. Building permits for November were at a seasonally adjusted annual rate of 1,289,000, an 11 percent increase over October and 19.5 percent more than November 2014.

U.S. economic activity should support high single-digit construction growth in 2016. Unlike the last growth cycle, credit has not been overextended as the expansion matured. There remain fewer financing obstacles, which may encourage more investment as owners see the beginning of a rate increase cycle as a good time to borrow. Moreover, investment interest in the U.S. is likely to increase further in 2016, as emerging market economies are perceived as too risky and mature economies are viewed as too sluggish.

Global growth is forecast to be just below and above the long-term average rate in 2016-2017.

job creation history

AIA ABI

AIA’s Architectural Billings Index remained solidly positive throughout most of 2015.

 

By: Jeff Burd