The Great Recession had an impact on every age group, but there is no doubt that it caused specific challenges for the youngest generation in the workforce, the millennials. After graduating with the highest student loan debt in history, millennials (born between 1980 and 1995) entered the labor market during a time of economic crisis.
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Now, as the dust begins to settle on the recession, and the economy starts to bounce back, it’s becoming increasingly clear that the impact the recession had on millennials during this formative professional and financial stage of their lives will be felt for years, maybe even decades, to come. And, it will impact not just the millennials themselves, but also the folks who are helping to see them through. Let’s take a closer look at the economic reality facing millennials today and how it’s likely to impact them, and their parents, in the future.
1. The number of young adults living at home with their parents is as high as it was in the 1940s.
First, let’s start with some facts: a really high percentage of millennials are living at home with their parents. It’s interesting to note that 18- to 34-year-olds are even less likely to be living on their own now than they were when the Great Recession hit, according to new analysis from Pew Research Center. The number of adults under the age of 35 that live at home is up from 42.2 million in 2007, to 42.7 million during the first third of 2015. These numbers mark a peak for young women in particular: 36.4 percent of women aged 18 to 34 lived with their parents in 2014, which topped the previous record of 1940, when the figure was 36.2 percent. Young men (who have always remained at home more than young women) are staying at home less than they did in 1940 (when 47.5 percent did so). Still, 42.8 percent of young adult males live at home with their families.
We’d expect to see these figures beginning to change as the recession fades into the backdrop of the past, but so far that hasn’t happened.
“Some of what’s happening is probably economics, because the great recession really hit young adults hard,” Dr. Richard Fry, the Pew Research center economist who analyzed the data for this study, told The New York Times. “But I’m still struggling with the economic explanation, since the labor market for young adults has improved in the last five years, and yet the percentage living with their family is still going up. It seems to be somewhat decoupled from economics.”
With about 40 percent of 18- to 34-year-olds still living at home with mom and/or dad, it’s pretty clear to see that the decision to remain with family for a time has become at least somewhat normalized. Perhaps that is encouraging these arrangements to persist.
“I don’t have any research to back it up, but one does hear that social acceptance of living with your parents has increased,” said Dr. Fry.
Millennials are also getting married later in life than young people have previously, and they are shouldering a tremendous amount of student loan debt. Staying at home allows them the opportunity to save up a bit before embarking on a more independent stage of life.
3. Millennials were shaken by the recession and have turned into a generation of savers.
Much like the generation who grew up during the Great Depression, millennials were deeply impacted by the economic crisis of their youth. The collapse of the housing market in particular has made them less anxious to buy a home than past generations. Saving as much as possible before breaking out on their own sounds a lot better to millennials who are trying to settle student loans before taking on mortgages. In the long run, they have the right idea. But, some worry that millennials’ approach could hurt the economy in general.
“We need the millennials to start leaving their parents’ homes and start out on their own for the housing market to normalize,” said chief economist at Moody’s Analytics, Mark Zandi, in a separate New York Times article. “This is going to be a problem if it continues.”
4. It’s just the only way to get ahead these days…
The reasons young people under the age of 35 are living at home at a rate not seen in almost a century is simply because it’s basically the only way to get ahead these days. Millennials needed college educations to secure good employment opportunities, and so they got them – they are the most educated generation in history. But, they also have more student loan debt than any generation has ever had to shoulder.
To top that off, they graduated during the worst recession in decades. Unemployment for young people (ages 16 to 24) was 15.5 percent in 2013. All of these factors delayed millennials’ entry into the housing market, and it shouldn’t surprise us. Times are tough. Staying at home with parents until their mid-30s or so might be millennials’ best bet for grabbing a piece of that American dream at some point. But, their late start will certainly have a long-term impact on them, their parents, and the economy in general.
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