Economic Perspective: Are the Kids Leaving Home?

MARY WALDEN:

“Today’s program asks if the kids are leaving home. Mike, one of the societal changes we’ve seen in recent years is the increase of young adults choosing to live with their parents after they have finished school. Some interpret this as a sign of trouble in the job market.”

“Now that the job market has been improving, is the number of young adults living at home with their parents still significant?”

MIKE WALDEN:

“Indeed it is still significant. This is an amazing statistic to me. If you look at the percentage of adults who are between the ages of 18 and 34, 38 percent of them now live with their parents. Now that’s actually gone up five percentage points in the last decade, and it’s just shy of the record of 41 percent set in 1940, right at the end of the Great Depression.”

“So I think this still indicates there’s an issue there. Many economists would argue this is an issue with some young adults not having the right skills, whether they be cognitive or non-cognitive, for the work force. There’s probably an issue there for those that have gone to college with student debt.”

“But the impact really goes beyond those individuals and their parents. This is effecting industries like home building. If not as many individuals are striking out on their own and setting up a house hold, they don’t need their own dwelling. Whether it be a rental dwelling or a home owner dwelling. It’s effecting the appliance market. It’s effecting the furniture market. All of those durable goods that go into and are associated with new households, they’re not increasing as fast we typically would see because of the number of young adults who are choosing to live with their parents.”

“So this is going to be a statistic that we want to follow in the future because as it goes down it will suggest that we’re getting more balanced there in the labor market between what businesses want and what individuals have in terms of skills. If it doesn’t go down, then we still have an issue.”