In the past several years, the amount of people age 25-34 who live with their parents has increased to a current record high of 19%. There are many factors that influence this new trend, and surprisingly not all of them pertain to economics. In fact, most of the effects are due to new social norms instead.
Recently, millennials have had to deal with the financial struggles of paying off massive college loans ($1.4 trillion of debt), finding jobs in a recovering job market, and buying a house in a market where prices have spiked 21% since 2012. These factors play an important role in why more millennials live with their parents today than millennials who live with a significant other. However, these financial struggles may not be the only influence on their decisions to live at home longer.
This graph shows the opposite of what one would think about the correlation between young adults living at home and economic success. As shown, the highest percentage increases of young adults living with their parents have occurred during times of economic expansion. This goes to show that the recent record high levels of millennials living at home is due to more than just their financial struggles, and interestingly is due to changing social norms.
A study conducted by the Pew Research Center showed that while the economy improved after the recent recession, there was actually an increased amount of millennials who opted to continue living at home. In addition to this study, the Pew Research Center found that compared to past generations, millennials have a tighter bond with their parents. Through these findings, it shows that economic struggles alone are not the only reason for more millenials living at home. It is the comfort and ease of mind that millennials feel at home as to why they are delaying this departure of leaving “the nest”.
Some fear that by more millenials living at home longer, they will have less incentive to search for as high paying of jobs as otherwise. This means that their salaries are lower and as a result, Social Security funds will not increase sufficiently enough to support the retirement of future generations. Additionally, the amount of consumption will decline as young adults have lower salaries and are sharing many purchased goods with their parents. These increases in millennials living with their parents may not be completely due to harsh economic conditions, but if it continues, they will create greater economic issues.