The trend is a sign of the recession’s lingering scars on the age groupl
The share of older Millennials living with relatives is still rising, underscoring the lingering obstacles faced by Americans who entered the workforce during and after the Great Recession.
About 20% of adults age 26 to 34 are living with parents or other family members, a figure that has climbed steadily the past decade and is up from 17% in 2012, according to an analysis of Census Bureau data by Trulia, a real estate research firm. The increase defies record job openings and a 4.1% unemployment rate, the lowest in 17 years.
Not surprisingly, a much larger portion of younger Millennials age 18 to 25 (59.8%) live with relatives, but that figure generally has fallen the past few years after peaking at 61.1% in 2012.
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After graduating from Texas Tech University with a journalism major in 2005, Heidi Toth, now 35, got a job quickly at a Provo, Utah, newspaper. But in early 2007, she went on an 18-month church mission, landing her back in the job market in the depths of the recession in 2008. Unable to find work, she moved in with her mother in Roswell, New Mexico, for nine months while she hunted for work and took part-time, low-paying jobs.
She was rehired at the Provo paper in spring 2009 but left again in 2013 after a series of layoffs modified her duties. After months of fruitless job searching and traveling, she returned to her mother’s house for three months until she was hired at a Lubbock, Texas, paper.
Toth was grateful she could live rent-free during her periods of unemployment. But, she adds, “It wasn’t ideal, professionally or personally.”
Prospective employers in larger, distant cities didn’t think she would be readily available for interviews. And at home, “I felt like I was back in high school,” she says. “I felt like I had to ask permission to go out.”
Toth, who now works in public relations at an Arizona University and rents a duplex in Flagstaff, says her winding career path has hampered her earnings and career advancement.
All told, 38.4% of 18-to-34-year-olds live with family. That’s up from 28.7% in 1962 in part because a growing number of young people are delaying marriage, says Trulia’s chief economist, Ralph McLaughlin. The living-at-home trend accelerated during the recession but has been stable since 2012 as more younger Millennials, but fewer older ones, leave the nest.
The older group got hit hardest by the recession of 2007-09 because that’s when many graduated from high school and college, economists say.
“That was a tough time to establish your career and gain work experience,” McLaughlin says. Many couldn’t get a job or took positions for which they were overqualified, setting back their careers and forcing them to move in with parents or other family members.
“That scarring, of not being able to get that experience after graduation, is very harmful,” says Elise Gould, senior economist at the Economic Policy Institute.
By contrast, many younger Millennials have pursued their first jobs in a healthy labor market the past few years. For employers, a 24-year-old just starting out may be a more attractive and cheaper hire than a 32-year-old with a spotty resume, McLaughlin says. As a result, some members of the older group may continue to struggle with underemployment and lower wages and move out on their own at a slower-than-normal pace, Gould says.
One sign that the younger group is closing the gap on older members of their generation in the competition for jobs: Their unemployment rate is typically much higher than that of the 26-34 age group because they lack experience. In early 2007, before the recession began, the jobless rate was 8.7% for the younger group and 4.7% for the older one. Early this year, however, unemployment had again fallen to 4.7% for the older workers but was just 7.8% for their younger counterparts — the smallest difference between the two populations on records dating to 1962, according to annual data compiled by Census and analyzed by Trulia
There are other reasons more older Millennials are living with relatives. Many are burdened by student debt and can’t afford high rents, especially in larger cities. Total U.S. student loan debt hit a record $1.36 trillion in the third quarter, the Federal Reserve Bank of New York said last week.
And with a housing shortage driving up prices in recent years, some people in their late 20s and 30s prefer to live with relatives so they can sock away more money to buy a home, McLaughlin says. But he and Gould say the battering that age group endured early in their careers is the main factor.
A 2012 study published in the American Economic Journal found that graduating from college in a recession causes an average 9% loss of earnings initially, and that deficit disappears only slowly over a decade or so. Graduates typically start at smaller, lower paying companies and switch jobs more often to catch up.
Some “less advantaged graduates can be permanently affected,” the study said.
A whopping 45 percent of millennials surveyed see no issue with skipping out on plans. Buzz60’s Elizabeth Keatinge (@elizkeatinge) has more.