Article
4 minute read 05 January 2022

Millennials and the “staying power” of pay

Money matters more than you think

Roxana Corduneanu

Roxana Corduneanu

United Kingdom

Abha Kulkarni

Abha Kulkarni

United States

Susan K. Hogan

Susan K. Hogan

United States

Steve Hatfield

Steve Hatfield

United States

Millennials may value culture, values and social impact, but when it comes to retention, none of these can compensate for low pay.

The assumptions that millennials are more motivated by purpose as compared to older generations,1 and that they wish to work for organizations that promote a clear set of social values and actions,2 have been gaining popularity in recent years. For example, factors such as workplace diversity, leader transparency, and well-being are often highlighted as what this generation values most.3 Moreover, a recent article suggests that millennials may even be willing to take a pay cut of more than US$7,000/year to work for an organization with a better cultural fit.4 However, can firms really hold back in what they pay these workers?

Our data suggests that this is not the case, especially when it comes to retention. Specifically, our Global Millennial Survey has consistently shown that the greatest source of dissatisfaction for millennials is pay, and that this issue has been brewing since even before the COVID-19 pandemic. Both in 20195 and in 2020,6 nearly half of respondents cited dissatisfaction with pay or financial rewards as the main reason why they’d consider leaving their current employers within the next two years. By comparison, the percentage of respondents citing dissatisfaction with organizational culture, lack of agreement with employers’ values, or missed opportunities for social action was far smaller, as the figure below suggests.

This by no means suggests that culture and social purpose are not important for millennials at work. However, it is important to acknowledge that attitudes towards work are not monolithic and attraction drivers may not be the same as retention drivers. What’s more, even when organizations do live up to their promises of social action, these factors alone may not be enough to compensate for low pay. Rather, to both attract and keep millennials around, both intrinsic (e.g., the opportunity to make a positive difference) and extrinsic rewards (e.g., pay, benefits, and other financial rewards) are needed.

Given the timing of the data, it appears that pay dissatisfaction could have contributed, at least in part, to the Great Resignation, with people reassessing their options and, in some cases, making the transition to better—including better-paid—jobs.7 Indeed, the increased number of job openings is putting pressure on employers to raise wages,8 and millennials seem to be at a stage in their lives where they may really need this. For example, some millennials are thought to be financially “behind” their older counterparts, mostly because many of them were hit particularly hard by high unemployment rates during the Great Recession.9 In addition, many are facing a higher proportion of consumer credit debt compared to other generations,10 as well as difficulties in the housing market, including increased prices and lack of availability of starter homes.11 While this may be true for the industry as a whole, it seems to affect millennials disproportionately as many have to pay off their student debt at the same time.12 What’s more, the uncertainty surrounding the COVID-19 pandemic only seems to have heightened these concerns, with 46% of millennials stating that their long-term financial futures contributed “a lot” to their feelings of anxiety or stress in 2021.13

Such findings, when viewed alongside the recent trends surrounding the Great Resignation, seem to suggest that it is becoming increasingly difficult for organizations to ignore these pressures to provide higher pay, and more generally, better rewards, particularly since millennials are now the largest generation in the US workforce.14 While investing in increased wages and benefits does have its challenges, research shows that reward satisfaction is indeed linked not just with a longer forecasted tenure, but with greater workplace contribution and productivity as well.15 In the long term, it may be the case that increased reward flexibility and choice become more important for organizations to consider as employees’ circumstances change. For now, it seems that alongside culture, values and social impact, the value of the paycheck is not to be discounted.

  1. Gallup, How millennials want to work and live , accessed December 6, 2021.View in Article
  2. Matthew Jenkin, “Millennials want to work for employers committed to values and ethics ,” The Guardian, May 5, 2015.View in Article
  3. Ed O’Boyle, “4 things Gen Z and millennials expect from their workplace ,” Gallup, March 23, 2021.View in Article
  4. Jonathan Chew, “Millennials would take a US$7,600 pay cut for 'quality of work life ,’” Fortune, April 8, 2016.View in Article
  5. Deloitte, The Deloitte Global Millennial Survey 2019: Societal discord and technological transformation create a “generation disrupted ,” accessed December 6, 2021.View in Article
  6. Deloitte, The 2020 Deloitte Millennial Survey: Resilient generations hold the key to creating a “better normal ,” accessed December 6, 2021.View in Article
  7. Heather Long, “It’s not a ‘labor shortage.’ It’s a great reassessment of work in America. ,” The Washington Post, May 7, 2021.View in Article
  8. Karl W. Smith, “Workers who quit their jobs could improve US productivity ,” Bloomberg Opinion, October 14, 2021; Christina Pazzanese, “‘I quit’ is all the rage. Blip or sea change? ,” Harvard Gazette, October 20, 2021.View in Article
  9. Deloitte Insights, A new understanding of millennials: Generational differences reexamined , October 17, 2015.View in Article
  10. Board of Governors of the Federal Reserve System, “DFA (distributional financial accounts) ,” accessed December 6, 2021.View in Article
  11. National Association of Realtors, “Realtors® midyear forecast: Home sales, prices to rise despite inventory, affordability challenges ,” May 17, 2018.  View in Article
  12. Steven John, “9 mind-blowing facts about the millennial housing market ,” Insider, June 16, 2019.View in Article
  13. Deloitte, A call for accountability and action: The Deloitte Global 2021 Millennial and Gen Z Survey , accessed December 6, 2021.View in Article
  14. Richard Fry, “Millennials are the largest generation in the US workforce ,” Pew Research Center, April 11, 2018.View in Article
  15. Anaïs Thibault Landry and Ashley Whillans, “The power of workplace rewards: using self-determination theory to understand why reward satisfaction matters for workers around the world ,” Compensation & Benefits Review 50, no. 3 (2018): pp. 123–148. 

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The authors would like to thank Naomi Bradley, Patricia Buckley, Pete DeBellis, Junko Kaji, Negina Rood, Jeff Scott, Lesley Stephen, and Rithu Thomas of Deloitte Consulting LLP for their contributions to this article. 

Creative by: Kevin Weier, Steffanie Lorig, Molly Woodworth, Swagata Samanta

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Steve Hatfield

Steve Hatfield

Global Future of Work Leader

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