The NY Times, in It’s Official: The Boomerang Kids Won’t Leave, explores the trend of increasing numbers of young people continuing to live with their parents after college.
The article notes that one in five people in their 20s and early 30s currently lives with parents, and 60 percent of all young adults receive financial support from parents. In the prior generation, only one in 10 young adults moved back home and few received financial support.
The common explanation for the change is that young people had the misfortune of growing up during several unfortunate and overlapping economic trends.
Today, almost 45 percent of 25-year-olds, have outstanding loans, with an average debt above $20,000, and more than half of recent college graduates are unemployed or underemployed, causing them to make substandard wages in jobs that don’t require a college degree.
According to Lisa B. Kahn, a Yale University economist, the negative impact of graduating in a recession never fully disappears. Even 20 years later, people who graduated during the 1980s recession were making substantially less income than people who graduated a few years afterward, when the economy was booming.
According to the NY Times, the latest recession only amplified a trend that had been growing stealthily for more than 30 years. Since 1980, the U.S. economy has been destabilized by a series of systemic changes that have affected all workers but particularly those just embarking on their careers. The result is that over the past 30 years, the onset of sustainable economic independence has been steadily receding.
These boomerang kids are not a temporary phenomenon. They appear to be part of a new and permanent life stage. More than that, they represent a much larger anxiety-provoking but also potentially thrilling economic evolution that is affecting all of us. It’s so new, in fact, that most boomerang kids and their parents are still struggling to make sense of it. Is living with your parents a sign, as it once was, of failure? Or is it a practical, long-term financial move?
Posted by Lewis J. Saret, Co-General Editor, Wealth Strategies Journal.