In recent years, the phenomenon of young adults residing in their parents’ homes has become increasingly prevalent in the United States. With approximately one in three adults aged 18 to 34 living with their families, this trend raises critical questions about economic stability, the impact of the pandemic, and the broader implications for society.
According to U.S. Census Bureau data, the proportion of young adults living with their parents has remained consistently high, particularly reflected in the data from the COVID-19 pandemic. Many young adults who had left home returned during the height of the pandemic due to job losses and altered living conditions. However, even before the pandemic, between 2005 and 2015, there was a noticeable uptick in the number of “boomerang” kids—those who move back home after having lived independently. The reasons behind this trend aren’t just anecdotal; economic shocks such as the Great Recession and the recent pandemic have significantly influenced the financial landscape for young adults.
Economic shocks are unexpected events that severely disrupt a nation’s economy and can drastically alter financial security for individuals. The 2008 financial crisis is a prime example of such a shock, which affected employment rates and income stability for an entire generation. Fast forward to today, and we see similar patterns emerging, particularly among Millennials and Gen Z. According to a recent Bank of America survey, a considerable proportion of Gen Z respondents report feeling financially constrained, unable to afford the lifestyle they aspire to due to exorbitant living costs.
The significance of these economic pressures cannot be overstated; they correlate tightly with the trend of living at home. Young adults lack the savings necessary for independent living, leading not only to a preference for cohabitation with parents but also to setbacks in household formation, which is a crucial driver of economic growth.
Take, for example, the case of Victoria Franklin, who moved back in with her mother after college. Like many of her peers, Franklin found herself entering a competitive job market where initial positions weren’t aligned with her qualifications. After a protracted job search, Franklin unexpectedly found herself bartending before landing a role in her field. However, even once she secured a position, the realities of the pandemic necessitated a reevaluation of her living situation.
Instead of rushing out to rent an apartment, Franklin opted to remain in her childhood home, harnessing the opportunity to save a significant portion of her income—between 40% and 50%. This financial prudence is emblematic of a larger trend—many young adults are prioritizing savings and long-term financial goals over immediate independence, choosing instead to allocate resources toward critical investments like home buying.
While the choice to live at home may provide individual financial benefits, experts warn of the larger economic ramifications. Joanne Hsu, a research associate professor at the University of Michigan, highlights a pivotal concern: while individual choices may favor savings and reduced living expenses, the collective impact on the economy can be detrimental. A healthy economy thrives on consumer spending, which typically surges when young adults leave the nest and form their own households.
Quantifying this, a Federal Reserve study from 2019 suggested that relocating out of their parents’ home could increase annual spending for young adults by approximately $13,000. This shift in living arrangements could, therefore, become a critical component of stimulating economic recovery and growth.
The increasing number of adults living with their parents is a multi-faceted issue rooted in economic conditions, societal expectations, and individual choices. While it may provide financial stability for some, it simultaneously poses challenges for broader economic growth. As we move forward, understanding the implications of these living arrangements will be key for policymakers, economists, and families alike. Addressing the root causes of economic instability and fostering an environment where young adults can thrive independently should be paramount for the future prosperity of the nation.