What Will Happen To The Economy When Gen Alpha Enters The Workforce?

Even though there has been a LOT of discussion surrounding what will happen to the economy as baby boomers retire (and Gen X faces a depleted Social Security), less energy has been spent on the other end of the workforce — the upcoming generation. Generation Alpha, born between 2010 and 2024, are expected to be the largest generation in history (they currently total 2 billion). Not only are they the first generation to be born entirely in the 21st century, but Gen Alpha is also the first to be born entirely into a world with smartphones, tablets, and near-constant connectivity. This exposure to technological advancement has given Gen Alpha a fundamentally different view of consumerism and commercialization than previous generations. This connectivity means, even though the oldest members of the generation are just 14, they're already a considerable economic force.

Mark McCrindle, a social analyst and demographer, explained to radio news broadcaster Voice of America, "They're spending money, and in significant amounts. Not only that, they influence parental purchasing decisions in a significant way. We estimate that the global spend of Generation Alpha direct, and in influence, is $5.5 trillion already, so a pretty phenomenal economic footprint to go with their unsurpassed demographic footprint." While marketers are increasingly turning their attention to this new generation in order to capitalize on their spending potential, the bigger economic picture could be how this generation will ultimately impact the workforce.

For starters, Generation Alpha is expected to live longer (and subsequently work longer as experts anticipate the cohort will work well into their 70s) than any other generation before. They'll also be more culturally diverse and educated than previous generations, with the Annie E. Casey Foundation estimating Gen Alpha will be the first U.S. generation in which the white population will represent a minority. They're also anticipated to live at home longer than any other previous generation as well.

While these factors can and will play a significant role in how Gen Alpha ultimately affects and shapes our society, it can be difficult to fully predict just how the new generation might impact the economy when what the economy might look like in the future is so different from what it is today. (For instance, will digital currency ever one day replace cash?) According to McCrindle Research, two-thirds of Gen Alphas will end up working in jobs that don't even exist yet. This is due in large part to the introduction of new technology and industries like app development, cryptocurrency, nanotechnology, and virtual reality.

Technological access from an extremely young age (consider, 49% already own their own tablets) means Gen Alpha's computer skills will far outmatch other generations entering the workforce, too; yet, that could be at the expense of other things. Social analyst and demographer Mark McCrindle explained, "The world has shrunk in the big five areas for children, which used to be playground and sport and outdoors and nature and neighborhood. They have become all compressed into a virtual environment."

As Gen Alpha matures, so too does their projected economic reach. Per McCrindle Research, an estimated $5.39 trillion is spent on this demographic annually already, with this spending projected to increase by $10 billion every year, giving the Generation Alpha cohort an unprecedented influence on purchasing decisions. In 2029, when the oldest members of Gen Alpha enter adulthood, their collective footprint is projected to be over $5.46 trillion.

Generation Alpha's focus on mental health and well-being is also a significant societal factor they could bring with them into the workforce. Not only does this younger generation not have the stigma surrounding mental health that older generations have struggled with, but Gen Alpha also places a higher premium on well-being and work flexibility. Experiencing the COVID pandemic during key development time periods, Generation Alpha will have a fundamentally different view of flexibility, including hybrid and remote options for their workplaces. This could positively impact businesses that have attempted to insist workers return to the office post-pandemic.

Notable challenges for Gen Alpha will include climate change, which will also, no doubt, change the way the country views sustainability and climate-focused policies. Over-population similarly will be a concern that could shape and change the economy, with the United Nations projecting that 11.2 billion people will live on Earth by 2100. While today's companies might see Gen Alpha simply as a wallet to be exploited, their future impact on not just the economy but also society as a whole could reshape the way the United States operates, not to mention our workplaces.