Social trends impacting business in 2020 and beyond
Editor’s Note: This article is part of a series on external trends impacting small and midsize businesses in 2020. In Part I, we study social trends. Read Part 2 on ecological trends impacting business here.
It’s been an event-filled 2019, and 2020 promises to be equally demanding in terms of the complexity of the social issues facing small and midsize businesses. Executive leaders should consider these trends as they plan for the year ahead.
America is showing its age. Over the last decade, Americans over the age of 65 have grown to represent 20% of the U.S. population. [i]
Our market economy deserves much of the credit for American life expectancy climbing from 47 to 77. Infant mortality plunged 93%, and polio, tuberculosis, typhoid and whooping cough were eradicated in the 20th century. [ii] The impressive rise in life expectancy actually puts pressure on a social security system not constructed to fund retirement of citizens into their nineties, who are supported by a shrinking pool of younger contributors.
On the other end of the spectrum, Generation Z (those between roughly 7 and 22 years old) now represent a quarter of the global population and spend over $143 billion in the U.S. alone. Gen Z will have its own spending habits and quirks. They will not be reached on television or on email. Instead, marketers are reaching them through Instagram, YouTube, Twitter and influencer blogs.
There are also seismic migration shifts, with one in four Americans living in California and Texas.
More trends affecting business in 2020
The great American housing imbalance
America continues to face a significant housing imbalance in both urban and rural areas. Even in the face of rising demand and low interest rates, many builders – overextended during the Great Recession – are unwilling to build at a time where our economic future is uncertain. In urban communities, builders such as Toll Brothers, DR Horton and KB Home are building smaller homes (the percentage of homes over 3,000 square feet is in decline).
Yet officials still point toward the shortage of housing at the bottom of the scale. Today, the notion of affordable housing is a bit of a fallacy in most American urban centers.
During the first half of 2019, new homes sales increased 6% while multi-family home building fell further behind, only growing by 2.2%. In many regions, only about a quarter of available land is zoned for apartments and townhouses. Some builders have shifted toward build-to-rent as a business model. States and municipalities are attempting to regulate this imbalance but remain woefully behind. [iii]
Mortgage rates in September were at their lowest in three years, leading to a surge in housing starts. The third interest rate cut by the Fed this year put more downward pressure on rates. Americans are also staying in their homes much longer than they have in the last quarter century, keeping inventory off the market.
The student loan debacle
Young workers are mired in debt. Elizabeth Warren and other presidential candidates have introduced the notion that college should be free, and the federal government should find ways to forgive $1.6 trillion in debt. A shake-up within the Department of Education’s loan program included a period where servicers stopped outreach to debtors, and defaults swelled. Today, about 15% of debtors are in default. With one-third of workers aged 25 to 34 having student loan debt, they are under significant financial pressure which is impacting their employment decisions.
Some universities are pivoting and experimenting with new methods. New investment funds such as those at Purdue University include capturing a percentage of student income in a novel approach to repayment. [iv]
The streaming war
Netflix, Disney, Amazon, Apple and WarnerMedia are in an all-out battle for our attention. Netflix is approaching a staggering 150 million subscribers and 700 original shows. Not to be outdone, Amazon is leveraging its powerful Prime platform to access content from other studios. Disney has vast assets across the consumer spectrum from Disney+ to Hulu and ESPN.
With over a billion devices in use and lots of star power, Apple’s vertical integration is a formidable adversary. While the technology and business model of streaming is only just emerging, faster processing speeds (including 5G) will be an enabler to adoption and prompt consumers to upgrade their devices. [v]
Immersive technologies are finding their way into all aspects of American life, including theme parks. The new Star Wars attraction at Disneyland uses robotics, machine learning and augmented reality to create next-generation immersive experiences. [vi]
Sexism and equality
The recent dismissal of McDonald’s CEO Steve Easterbrook for entering into a consensual relationship with an employee was proof positive there is a new bar for workplace behavior. On the heels of high-profile criminal charges against Harvey Weinstein and Jeffrey Epstein, awareness was raised through the #MeToo movement. Now, private companies are accelerating policies aimed at eliminating workplace harassment and supporting initiatives that encourage greater inclusion and diversity.
While progress has been made, the average full-time female worker earns 82% the rate of men. In progressive, populated states such as California and New York, they earn about 89%. [vii] See how formalizing policies protects employees from discrimination and their employers from litigation.
Drug use and mental health awareness
The frequency of drug overdoses per 100,000 people is up four times since 1999. [viii] Almost every state has sued OxyContin producer Purdue Pharma. Purdue filed for bankruptcy and reached a tentative settlement with over 2,000 cities, counties and states, effectively putting the company out of business. [ix]
Drug use in the workplace is also on the rise. Last year about 4% of workers failed drug tests – the highest incidence of drug use since 2004, with marijuana use on the rise. [x]
Patients are having a hard time finding mental health services. Thirty-four percent of patients report difficulty finding a suitable provider in their network. Forty-five percent of behavioral therapists are not accepting new patients. With rising costs, covering mental health is a strain for many employers.
Technology and privacy
A chain of hacks, the emergence of “fake news” and scandals within technology companies have left consumers untrusting of their devices and social media channels. Many IT departments have been forced into a posture of playing defense, acting as stewards for keeping company information safe. [xi]
Cyber insurance is a hot product. Marketers are revising privacy policies, offering more transparency and providing customers with options to opt in and out features such as geo-tracking. Blockchain inscription may be a technology leveraged to improve ease of use in maintaining passwords and security.
The biohacking movement
As highlighted in the popular Netflix series “Unnatural Selection,” a do-it-yourself celebrity biohacker named Josiah Zayner is injecting himself with genetically modified material at a conference. Some argue that manipulating their own DNA should be a viable alternative to traditional medicine and exorbitant pharmaceutical prices. [xii]
California has passed legislation to limit gene editing in the home. Detractors point out that the do-it-yourself movement does not lend itself to testing, validation or other scientific best practices. Startups such as Livestock Labs have received seed funding for tests on livestock.
Given the numerous tragic mass shootings in 2019, it is expected that a number of U.S. states will pass stricter firearm laws during the 2020 campaign season. In some states, lawmakers are considering various measures that would raise the buying age for firearms or ban certain styles and accessories. Others ban access for “high-risk” would-be gun owners. Seventeen states including California, Connecticut, Florida, Illinois, Indiana, Florida and New York have approved such “red flag” laws.
Reflect on these social trends and take them into consideration as you approach your strategic planning for 2020. How will you refine your company culture to embrace the generational differences in your employees? In considering the challenges around housing and health, will you offer your employees the option to work remotely or emphasize preventative health care? To be better prepared with regard to security and privacy, will you revise your technology and social media policies?
Stay tuned for upcoming reviews of trends expected to influence business in 2020.
[i] Is the continued rise of older Americans in the workforce necessary for future growth? By Bauer, Liu and Shambaugh Brookings
[ii] Naked Economics by Charles Wheelen
[iii] The Kiplinger Letter, Vol. 96, November 30
[iv] Investing in College Grads – Literally by Claire Boston, Bloomberg Businessweek
[v] Who’s Winning the Future of Hollywood? Fast Company, May 2019
[vi] It’s A Big World After All by Ysmin Gagne, Fast Company
[vii] America’s Women and the Pay Gap, National Partnership for Women and Families, September 2019
[viii] Bloomberg Businessweek, May 20, 2019
[ix] Purdue Pharma Reaches Tentative Deal In Federal, State Opioid Lawsuits by Bernstein, Davis and Highman, Washington Post, September 11, 2019
[x] Workers Marijuana Use Major Contributor To Rise In Positive Drug Tests, Analysis Shows, Safety + Health Magazine, April 17, 2019
[xii] Stop Stabbing Yourself, Bloomberg Businessweek, October 14, 1019