It’s true: Kids Today are more dependent on their parents than Kids Yesterday.
At least when it comes to housing.
Nearly a third of Americans age 18 to 34 were living with their parents in 2014, according to a new analysis from the Pew Research Center. That’s the highest share since the Great Depression.
It was also the first time since at least 1880 that young adults were more likely to live in their parents’ homes than in their own households with a spouse or other romantic partner.
Crusty old pundits will surely declare this a sign of millennials’ failure to launch. They will bemoan young people’s insistence on mooching off of beleaguered boomer parents rather than going into the real world and getting their own grown-up jobs, spouses and mortgages. Millennial basement-dwelling — along with millennial musical tastes, millennial slang and millennial fashions — is thus clear evidence of a generation-wide crisis of character.
But there are a few reasons all this re-nesting may not be such a bad thing.
For one, consider the macroeconomic and social conditions that today’s young adults face.
Young adults want to live on their own and aspire to purchase homes. But homeownership remains far out of their reach. National home prices today are not so far below their pre-recession peaks, with some metro areas even reaching all-time highs.
Meanwhile, rents, too, have skyrocketed, fast outpacing inflation.
Young people are also living with their parents in higher numbers in part because they’re delaying marriage. This is a consequence of both precarious job prospects and a growing perception that financial security is a prerequisite to tying the knot — which the vast majority of singles say they still very much want to do.
In this context, swallowing their pride and living above the family garage rather than frittering away money on rent looks rather financially prudent.
Second, the growth of intergenerational households shouldn’t be so alarming given how common this living arrangement is everywhere else in the developed world. In fact, the share of young adults here who live with their folks is still relatively low compared with the rate in many of our peer countries.
According to a recent census survey, 42 percent of Canadian adults age 20 to 29 live in their parents’ homes. Across the European Union, nearly half of young adults age 18 to 34 live with their parents. In Japan, about half of unmarried 20-to-34-year-olds (dubbed “parasite singles”) live with their parents, too.
But, you cry: American exceptionalism! We don’t want to be like everyone else!
It’s not clear, though, why a society in which young singles live on their own is more desirable than one in which the same demographic errs on the side of doubling up with relatives. This norm is especially puzzling in the United States, where for decades the tax code has incentivized home buyers to purchase as much house as possible, whether or not they need the space.
Perhaps it makes sense to use the housing stock we already have more efficiently, rather than insisting that young people move out as part of some artificial adulthood milestone.
Of course, boomers may object to bunking up with their boomeranging offspring, even on occasions when they do have ample space.
Today’s boomers have benefited for decades from huge public intergenerational transfers of wealth. Is it really so much to ask that they make some much smaller private intergenerational transfers to their own children?
The public infrastructure that boomers have enjoyed all their lives was largely built by their elders. Those who went to college paid very low tuition and received much more generous public subsidies for their schooling. For decades they have paid tax rates far too low to actually fund the government services they receive. They have racked up trillions in federal debt and handed the tab to their kids.
As boomers increasingly age into Medicare eligibility, those intergenerational transfers will further balloon.
Take a two-earner couple who worked every year of their adult lives, with both spouses receiving the average wage until turning 65 and retiring last year. For every $1 that they paid into the Medicare system, they will receive $3 back in benefits, according to estimates from the Urban Institute.
Guess who has to pay the difference? Yup. Their good-for-nothin’, basement-dwelling, parasitic boomerang kids.
In this light, the return home of young adults should be seen less as an act of morally bankrupt mooching and more as a step toward balancing the intergenerational ledger.