So what’s the harm of sticking around with mom and pops a few more years?
Saddled with massive student loan debt, it might seem smart for them to live rent-free while working to pay down that debt, solidifying their financial footing before flying the coop. But there could be lasting implications on the economy and, unfortunately, on millennials, too.
Still Struggling to Find Jobs
The census report shows that 24 million lived in their parents’ home in 2015, the most on record. But here’s the kicker: of those living in their parents’ home, one in four are idle, meaning they neither go to school nor work.
The latest numbers don’t really help the reputation of a cohort already dubbed the “basement generation” for their predominant living arrangement.
But to be fair, millennials are still struggling to find jobs. The millennial unemployment rate stands at an average of 13.1 percent since 2000, compared to an average of 5 percent for other age groups. And by many measures, millennials may be the hardest hit from the Great Recession compared to other generations, when you consider wage stagnation and how that will affect their ability to catch up.
And to their credit, millennials are doing better at keeping credit card debt at bay. A recent analysis by The New York Times showed that the percentage of Americans under 35 who hold credit card debt has fallen to its lowest level since 1989, when standardized collection of that data began. (The article also points out that even this good behavior, however, can have a negative long-term impact — they may not build credit for important purchases later on, such as a house.) Millennials can’t seem to win.
The census report has sparked yet another round of criticism, with headlines such as Millennials need to move out and get a life!
Jake Novak, the CNBC senior columnist behind that article, warns that millennials living at home could actually cause greater economic troubles long-term. This “emotionally comfortable” living arrangement, he argues, creates a disincentive for young adults to seek higher-paying jobs and take other entrepreneurial risks, and lessens demand for housing, baby clothes, and cars — purchases that fuel the economy.
He doesn’t stop there. While he doesn’t call it a housing crisis, he conjures the image by asking what will happen when baby boomers and Generation Xers try to sell their expensive homes to fund their retirements to a generation without the means to buy. And if millennials aren’t working to fund the Social Security and Medicare pots and to invest in their own retirement, imagine the economic fallout, he writes.
A Tough Housing Market
But predictions of a dystopian future don’t erase the housing reality that many millennials face today. Rents are rising faster than wages, meaning some millennials simply may not be able to pay the rent. Plus, in the last four years, it’s gotten harder for many renters to buy a house.
Even thought leaders who once advocated for creation of communities to cater to tech-savvy young professionals are acknowledging the difficult housing realities their ideas might have created.
Richard Florida, who wrote the best-selling book The Rise of the Creative Class in 2002, recently released The New Urban Crisis, which describes the contradictory effects of the “creative class” clustering in small areas. Cities and developers followed his advice to build hip but tiny apartments designed for creative millennials, but the result was it drove living costs so high that low-income and even middle-income households were pushed out.
While some cities benefited, others faltered.
Finding a Hospitable Home
So, before you jet from the parents’ basement, you might want to make sure that where you land is hospitable to your generation. Trulia, a mobile and online real estate resource, recently ranked the best and worst cities for millennial success. It looked at 100 metros “to see where millennials were killing it on homeownership, education, employment and income.” As of 2015, millennials are more likely to own homes, make more money and have jobs than their older peers in places like Philadelphia; Grand Rapids, Michigan; Omaha, Nebraska; and New Orleans.
If you are mulling moving out of mom and dad’s house, you also can check out PayScale’s Cost of Living tool. It can show you the cost of living difference in a city you’re considering moving to, as well as how much you need to make in the new location to maintain your current standard of living.
Tell Us What You Think
Are millennials just getting a bad rap, or are there serious economic implications of them living at home? We want to hear from you in the comments here or join the conversation on Twitter.