Why There's a Decline in Driver’s Licenses in the US

Where we live and how we get around is changing, and millennials are leading the way. Millennials, those between ages 18 to 34 (also known as Gen Y), now outsize the baby boomer generation. With 80 million millennials in the US alone, their economic power is redefining nearly every aspect of our society, including transportation.

Unlike previous generations, millennials are ditching the idea of buying a suburban home with a white picket fence opting, instead, for apartments located in so-called close-in cities. Living in or near big cities appeals to Gen Y'ers because the things they want and desire are nearby. City planners throughout the US recognized this trend years ago, and built affordable housing, restaurants, and retail areas to attract millennials.

But chalking up the societal change to simple answers such affordable housing, restaurants, and proximity to entertainment is only part of the answer. Living in urban areas has become a lifestyle and that lifestyle, in many ways, has its roots in basic economics.

Crushing debt

Millennials have a one trillion pound gorilla on their back. The gorilla is called student debt. According to the Consumer Financial Protection Bureau, millennials are on the hook for $1.2 trillion dollars in student loan debt, $1 trillion of which is held by the federal government. The remaining $200 billion is privately held debt that carries with it punishing interest rates that sometimes exceed 18 percent. Today, students are graduating with debt twice the size of those graduating in the early 1980s.

With that kind of debt load, millennials are doing the prudent thing - they're living close to big cities that have good access to public transportation, employment opportunities, and places to socialize. Simply put, they don’t need a car.

Millennials are moving to so-called close-in cities such as Hoboken, New Jersey. Hoboken is located across the Hudson River from Greenwich Village in Manhattan. What attracts millennials to Hoboken is the rent is less expensive when compared with Manhattan. It has trendy restaurants, shopping, and vibrant art and music scene.

Missing from this list, however, is parking. If you live or visit Hoboken be prepared to walk, bike, take the light rail, or utilize a ride service such as Uber to get around, because unless you’re really lucky you’re not going to find parking.

Fortunately, those who live in Hoboken don't need much encouragement to seek alternate forms of transportation. Nearly 60 percent of its residents already take some form of public transit, the highest percentage of any city in the country. Subways run from Hoboken to Penn Station and Battery Park in Manhattan, making New York City easily accessible, and the light rail runs up and down the New Jersey shoreline.

Hoboken isn’t the only close-in city to attract millennials. The China Basin area of San Francisco is located adjacent to AT&T Park where the San Francisco Giants play baseball. The area was once littered with abandoned warehouses, and decrepit parking lots.

Now, hundreds of newly built apartments and condominiums stretch for a mile and a half from the stadium. New restaurants, coffee shops, and retailers, have moved into the area turning it into a trendy enclave. Those who live in China Basin are within a 15 minute walk to Union Square, the heart of San Francisco.

And the thing that’s missing from China Basin? Parking. To get there it’s best to take the train or ride the Ferry because finding parking is difficult.

When urban communities combine affordable housing, good public transportation, and are within close proximity to all the attractions that a major city has to offer, who needs a car or a license?

Fewer licenses issued

A study conducted by the University of Michigan Transportation Research Institute concluded that only 76.7% of 20 to 24 year olds have driver’s licenses today compared with 91.8% in 1983.

Perhaps even more striking is that in 2014 only a quarter of 16-year olds had a license, compared with nearly 50 percent in 1983. Once upon a time, getting a driver’s license was a major step toward adulthood. That’s no longer the case.

To get around, Gen Y'ers do what they do best - they turn to technology to find the answers. When they need to get to work or want meet up with friends, they open an app to see if the subway is running on time, map the shortest walking route, find the nearest bike share station, or schedule a ride with Lyft, another on-demand ride service.

With so many options, owning a car, paying for insurance, and renting a parking space is a non-starter. Household budgets for millennials are already stretched thin.

Companies have gotten hip to the new norm. In San Francisco, companies such as Google run shuttle buses from various locations throughout the Bay Area to the company’s headquarters in Mountain View, located in the heart of Silicon Valley.

Not only do millennials view shuttle bus rides as an alternative to driving, they see them as adding a few extra hours of productivity to their day while someone else drives.

Other companies such as Salesforce.com and Linked In have opened big offices in the heart of San Francisco to make it easier for employees to get to work, and to bring tech back to the city.

Redefining the way society interacts

Just as technology turned the taxi industry upside down, it’s also redefined what it means to “socialize.” According to a report by the marketing firm Crowdtap, millennials spend almost 18 hours a day consuming some form of media. They use social media to “hang out” with people who have similar interests, share opinions, give advice, talk about their lives, and make plans to get see each other.

As an example, when millennials decide to get together they’ll text each other to figure out what the group wants to do. If they want to try a new restaurant, someone will hop online to check out options and read reviews. And to get to the restaurant they’ll take some form of public transportation or a ride service. Why? Because it's easier, there's no need to find or pay for parking, and it’s safe to have a good time (i.e. no designated drivers needed).

The communication between the group is in real-time, decisions can be made instantly, reservations can be made online, and travel options can be researched with a few clicks.

Millennials also use technology when they want to stay home and socialize. In the mood for pizza, but too lazy to go out? Tap an emoji and it will be at your door within 30 minutes. Want to watch a movie? Fire up Netflix. Interested in finding a date? There’s no rule that says you have to leave your house, just log on to Tinder and swipe right or left.

When millennials have this kind of power in the palm of their hand, who needs who needs a license?

Driver’s education

For teenage millennials, getting a license isn’t as easy as it used to be. A generation ago driver’s education was part of the high school curriculum where soon-to-be drivers received both classroom, and real world driving instruction. Back then, getting a license was easy.

Those days are long gone. Now, teenage drivers are required to take a drivers education classroom course on their own nickel, and spend several hours on the road practicing before they earn a license that comes with restrictions.

In California, for example, new drivers aren’t allowed to carry passengers under the age of 20 unless accompanied by an adult, nor can teens drive between the hours of 11 pm to 5 am.

Some California millennials say the process isn't worth the time or money.

The future of driver’s licenses

Will the trend of eschewing driver’s licenses continue? That’s a question that politicians, city planners, transportation experts, financial analysts, and real estate professionals grapple with every day. This much is known: with entry level wages and high debt levels, a good number of millennials don’t qualify for car loans or home mortgages. Given this, will there be a mass migration to suburbia, or a stampede to buy homes? Probably not in the foreseeable future.

According to the Wall Street Journal, car and truck manufacturers sold 17.5 million vehicles in 2015, an increase of nearly six percent over the previous year. Will the industry continue to grow? That question also remains to be seen, but the growth isn’t likely to come from the millennial sector. At least not for a while. With the amount of student debt that millennials are carrying, they won’t qualify for reasonable auto loans anytime soon...which could slow the economy.

Will the number of millennials with driver’s licenses increase? That’s anyone’s guess, but as student loans get paid off, income rises, and gas prices stay low, millennials might consider fitting a car into the household budget. Particularly as they begin having families. But none of this is going to happen overnight.

If millennials decide that city life is the new norm, and resist the urge to get a license, you just might find yourself waiting in shorter lines at the DMV.

The statements expressed above are only for informational purposes and should be independently verified. Please see our terms of service for more details

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