Dear Millennials, You’re Ruining The Economy. Move Out
By Gail MarksJarvis, Chicago Tribune (TNS)
The kids are back home and showing no inclination to move out on their own.
More than five years after the end of the Great Recession, 18- to 34-year-olds seem to be comfortable with a lifestyle that differs dramatically from the past. Even though the job market has improved, millions more are living with their parents now than during the depths of the recession.
A study of U.S. census data by the Pew Research Center shows 16.3 million millennials living at home, compared to 13.4 million before the housing bust set off one of the worst recessions since the Great Depression. About 26 percent of young adults are living with their parents, according to Pew. In 2007, it was 22 percent. When the job market was at its worst, 24 percent of millennials were living with family.
That’s put some economy watchers on edge, because they expected a change by now.
During the dreary days of the recession, it made sense for young adults who needed a roof over their heads to stay home while job opportunities were slim. But they were expected to move out when they got jobs or better-paying jobs.
Of course, the job market still has a way to go to give young adults better financial footing. Yet unemployment is less of an issue now, with 7.7 percent of those 18 to 34 unemployed, compared to 12.4 percent five years ago. Pay has also improved, although it hasn’t popped back to pre-recession levels. Pew notes that the median weekly pay is $574 compared to $547 in 2012.
If the trend continues, there could be serious implications for the economy. Adult children curled up on their parents’ couches don’t need to buy their own furniture.
Pew economist Richard Fry found no uptick in the number of young adults establishing their households despite a 3 million spurt in the 18- to 34-year-old population since 2007.
“This may have important consequences for the nation’s housing market recovery,” he said. “The growing young adult population has not fueled demand for housing units and the furnishings, telecom and cable installations and other ancillary purchases that accompany newly formed households.”
Analysts wonder if there’s been a cultural shift that will continue to restrain the economy.
Previous research by Pew shows that millennials, unlike previous generations, aren’t in a hurry to get away from parents. But other research also suggests that financial reasons continue to draw young adults into their parents’ homes.
Rents have climbed sharply, rising 4.3 percent in major cities in June, while the average hourly wage has climbed just 2 percent. Because they went to college in 2008 as the recession trampled job opportunity, many young adults are laden with student loan debt.
A study by the New York Federal Reserve in June found that areas of the country with high youth unemployment, expensive housing, and high incomes tend to be where more young adults were living with parents.
Still, the majority of people 18 to 34 are living independently, although the tendency to be on their own has been shrinking.
During the first four months of 2015, 42.2 million 18- to 34-year-olds (67 percent of the group) were living independently compared to 71 percent prior to the recession. Women have been more likely to live independently, 72 percent compared to 63 percent of men.
Besides living with family members, millennials have also been doubling up with roommates who are not spouses or unmarried partners. Early this year, 47 percent were living with another person, most often a parent or adult relative. But 16 percent were living with a nonrelative, apparently sharing expenses rather than stoking the economy on their own.
Photo: Bill Benzon via Flickr