Lest you think there is no permanent damage left by prolonged recessions, take a look at this chart:
The chart, released yesterday by the Census Bureau, shows the share of young adults living with their parents.
As you can see, among the youngest set — those 18 to 24 years old — the share stuck at home has been falling for the past couple of years as the economy has improved. But among the slightly older group, those 25 to 34, the share living in their parents’ basements has been rising. This has happened as the cohort that graduated from school in the immediate aftermath of the economic crisis has subsequently aged into the next age bucket. A lot of them probably moved home while they were still in their early 20s and just never left. The recovery came, but it left them behind.
Studies by Lisa Kahn and by Philip Oreopoulos, Till von Wachter and Andrew Heisz on the scarring effects of recessions illustrate why: People who enter the job market in a lousy economy have persistently lower earnings. They start out at lower-paying firms, if they get hired at all; they get stuck on a track where any subsequent raises are based off of that initially lower starting salary; and they generally have a lot of difficulty switching onto a different, higher-paying trajectory.
Despite stereotypes about lazy millennials mooching off their guileless parents, if you’ve ever met any of these unlucky, underemployed young people, you know that they’re usually extremely eager to strike out on their own.
Easier said than done, though.