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Kevin Quinn is a compelling teacher as well as an eminent economist.

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Kevin Quinn, professor of economics at St. Norbert College, is founding dean of the college’s new Donald J. Schneider School of Business & Economics. An influential scholar, his primary research focus in recent years has been in the field of sports economics. He is the author of “Sports and Their Fans,” which examines the history, economics and culture of the relationship between spectator and sport; and a regular guest economist on Wisconsin Public Radio’s Ideas Network. In today’s column, he underscores the critical importance for northeast Wisconsin businesses of attracting and retaining the newest members of the workforce: the millennials.

June 2006. “Cars” was the month’s big movie. “Google” was about to be added as a word to the Oxford English Dictionary, although Twitter wouldn’t launch until July. Kim Kardashian boasted 856 friends on her official MySpace page. And, until December 2015, this was the last time that the Federal Reserve Board of Governors raised U.S. interest rates. 

A couple of years later, the United States suffered its most serious economic crisis since the Great Depression. During the first half of 2009, the U.S. economy shed nearly four million jobs, with the Dow Jones Industrial Average in March sitting at less than half of what it had been 18 months prior. In response, the Fed held real interest rates to zero for the next several years. 

This past December’s interest rate increase means the Fed’s Dumbledores have deemed the crisis finally over. Indeed, real U.S. gross domestic product, which is the broadest measure of total economic activity, is about 15 percent larger now than it was at its nadir. The Dow is up about 150 percent from its bottom, even with the China sell-off in early January. Meanwhile, although prices for goods and services have remained stable in the years since the crash, concern has rebalanced recently from slow growth to inflation. Except for a few sectors – most notably manufacturing and energy – the U.S. economy feels on significantly safer ground than it has for a long time. 

Most Americans measure economic health through the lens of the labor market. There have been 70 straight months of employment growth, resulting in more than 14 million more private sector jobs, and the creation of “good” jobs seems to be accelerating. Even so, inflation-adjusted disposable income per capita has gone up by only nine percent since January 2010, with nearly all of that accruing to the highest earners. Meanwhile, after-tax corporate profits have increased by more than 20 percent. Despite stump speeches to the contrary, this disparity is not so much the result of politics, but of a buyer’s market for labor – one that now looks to be tilting toward workers. 

For the first time since Kim Kardashian was a MySpace phenom, annual private sector compensation costs are increasing at three percent or more, with business and financial managers, salespeople, and IT and transportation workers seeing particularly sharper hikes. The primary concern reported by senior business leaders is now talent, not demand. Overseas labor continues to become more expensive as developing economies create their own middle classes. Consequently, the increasingly rapid exit of baby boomers from the workforce and the relative dearth of Gen Xers means that a region’s future economic health will greatly depend on its ability to staff firms with local millennials. It’s certainly a topic in which we at the Schneider School maintain an active watching brief.

Much has been written about what millennials expect in the workplace, including quicker career paths, more work flexibility and meaningfulness, and different communication styles. But just as important is the millennials’ greater focus on work-life balance than that of the boomers when they were young. In particular, millennials care a lot about how and where they live, and successful employers and communities will recognize and adapt to these changes. 

Perhaps because millennials watched their parents’ financial security get blown up by home debt, and maybe because they carry such hefty student-loan burdens themselves, they subscribe far less to two American debt-driven love stories: houses and cars. Renting an upscale urban-cool apartment is much more likely to provide the walkable live/work/play experience millennials want than does the mortgaged three-bedroom, half-acre, single-family residence in a sprawling neighborhood. Well-educated and highly skilled young people are flocking to Minneapolis, Chicago, Brooklyn and Denver – not because they are inexpensive cities, but because they offer the highly connected, caffeinated, culturally engaging lifestyle that millennials crave. The house and kids can come later.

Just like zero interest rates, the era of easy labor markets for employers is over. As the American economic narrative turns from weak growth toward scarce workers, millennial-friendly community amenities will begin to trump regional cost-of-living considerations. A region’s economic competitiveness throughout the next several decades will depend on the ability of its businesses, governments and not-for-profits to successfully provide living experiences in line with millennial preferences. 

Jan. 28, 2016