Millennials are choosing to move back home with their parents more than previous generations. But why are millennials struggling to get their own home? A lot comes down to the Great Recession, which hit when millennials were just starting their careers. Though the economy has now recovered, the Great Recession had a long-term impact on millennial careers and finances.
The statistics vary from state to state, but on average, about a third of millennials are living with their parents. This interactive map shows the exact rate for each state, ranging from 16% in North Dakota to 47% in New Jersey. Here are seven reasons why millennials continue to rely on their parents, even in a recovering economy.
Student Loan Debt
Millennials are more educated than any previous generation. At the same time, the cost of tuition has never been higher, even at public colleges. Millennials have taken on an unprecedented amount of student loan debt to pay for college, and this burden has prevented many from moving out and getting their own home.
Low Pay / Unemployment
Student loan debt wouldn’t be such a problem if millennials were able to get high salaries, but that’s often not the case. While tuition and rent have risen sharply, wages have stagnated, so that college graduates can barely cover their bills. This problem was especially acute for millennials who graduated during the financial crisis, when well-paid, entry-level jobs were hard to find.
What about millennials who didn’t go to college? Given the high cost of education, some millennials decided to skip college and start their career after high school. This decision didn’t necessarily lead to more financial freedom, however. In fact, according to the Pew Research Center, non-college grads are more likely to live with their parents than college grads.
This is partly because it’s even harder to get a decent job without a college degree nowadays. There’s an earnings gap of about $17,500 between millennials with a college degree and those without. After all, with so many college-educated millennials, employers have plenty of applicants who offer more than a high school diploma.
With low wages and student loans to pay off, many millennials are unable to get a mortgage to buy a home. They’re stuck paying rent, and typically high rent. Rental prices have skyrocketed in recent years, even in cheaper areas.
Major cities, where many well-paid jobs are, have some of the highest rental prices. A millennial might get a nice job in San Francisco or New York, yet still, be unable to pay off their student loans because a chunk of their income is going towards rent. To get around this expensive rent, some millennials choose to live with their parents so they can start paying off debt and saving money.
End of a Relationship
Another way to cope with high rent is to have a roommate. In some cases, this “roommate” is a spouse or partner, which allows for a one-bedroom apartment or even a studio. Combining incomes to pay a rent or mortgage can work well, but if the relationship ends, so does the housing.
Besides losing housing, a divorce or breakup can cause emotional stress that makes everything else more difficult. While recovering and searching for a new living situation, some millennials go back home, if only for a month or two.
Losing a job is similar to losing a relationship. It comes with emotional and financial stress that can drive a millennial to move back home.
But job loss isn’t the only type of career change that can cause millennials to live with parents. Sometimes, the career change is voluntary. Faced with unchallenging, low-wage jobs, some millennials decide to get a job in a different industry. They might quit their job to learn computer programming or start their own business, hoping for a higher income and more interesting work.
The investment of time and money that this career change requires can lead millennials to move in with their parents. With this parental support, they’re able to get unstuck and make their career ambitions a reality.
Not all millennials are struggling with student debt, low pay, and unaffordable housing. Some had scholarships or parents who paid for their college tuition, and they’re able to get good jobs that cover rental costs.
Even in this group, though, there are some who choose to live with their parents. By moving back in with their parents, they’re able to save and invest much more in the future. They might want to buy a nice home or save up for early retirement.
If they get along well with their parents and share responsibilities like cooking and cleaning, this arrangement can be great for everyone. Though untraditional in Western culture, multi-generational living is common in much of the rest of the world and can work wonderfully if the family relationship is strong.
Care for Parents
The majority of reasons why millennials move back home have to do with the difficult circumstances facing today’s young adults. But in some cases, the parents are the ones with a difficult situation.
As baby boomers grow older, they’re starting to experience medical problems that require extra support. Unfortunately, there’s a shortage of affordable care for aging boomers. While some are able to move into retirement communities or hire in-home help, the majority can’t afford those costs.
In the past, caregivers of the elderly were often unpaid family members, typically women. But times have changed. Now, families are smaller and live farther apart, and more women are in the workforce, unable to care for their aging parents.
However, in some cases, millennials can support their parents by moving back home. This arrangement can be ideal for both parties; boomers get extra help around the home, and millennials get a free place to live. Far from being slackers who never leave the nest, these millennials are providing a valuable service, making their parents’ Golden Years happier and easier to bear.