The recession, which began late 2007, was the worst financial crisis Americans have experienced in recent decades. National unemployment rates jumped to ten percent, the highest in twenty years. Birth rates fell. Personal debt skyrocketed. Though the Great Recession affected the entire country, one age demographic received the brunt: Millennials.
The nation’s largest generation since the Baby Boomers were welcomed into the labor force with a shrinking job market, insane amounts of debt, and no experience to fall back on. Thus, 32 percent of the Millennial population were driven back to their childhood homes, as Pew Reserch reported this year.
But while current statistics indicate that the majority of America is getting back to work and starting to recover eight years after the beginning of the recession, one thing remains the same: Millennials are not leaving their parents’ homes. In fact, the rate of Millennials moving back in with their parents and families is increasing.
It’s all about the Benjamins
The end of the recession has been official as of 2009, according to the National Bureau of Economic Research. Even Mercer, a renowned global consulting agency, found in their annual Compensation Planning Survey that the average worker received pay increases of about three percent in just the last year. But the Millennial demographic specifically has seen a continuous decrease in average wage by almost thirteen percent over the last decade.
Unemployment, along with the seldom discussed underemployment, act like gasoline on the fire. Young workers have historically always had higher rates of unemployment when compared to other age groups, but Millennial unemployment rates hit an all time high in 2010, and currently show no signs of dropping. One and a half million degree-holding Millennials were unemployed or severely underemployed in minimum-wage positions, according to a study by the Associated Press in 2012.
But let’s look at the bright side. The average wage of a full-time worker between the ages of 18 to 34 is about $34,000. This sounds like a fair wage on the surface, until you factor in the rise of the cost of living in the United States. According to the Economic Policy Institute, the median cost of living is about $35,000. That doesn’t leave much room for saving or investing. In fact, it leaves miles of room for borrowing.
According to a report from Pew Research, the median amount of debt for Millennials is $73,000 for those with degrees, and $3,000 for those without. However, for individuals who took out student loans, the median debt for those with degrees increased to an astounding $137,000, and $28,000 for those without.
Cecil Bohanon, an economics professor at Ball State University, points out that Millennials, and all college students, shoulder this debt to make more money over their lifetime.
“I think the point to be made is that if student debt did go away, that means someone else is picking up the bill,” Cecil said. “Somebody’s going to be reducing their consumption on one margin in order to finance the acquisition of education for somebody else, so the drag on the economy, it seems to me, doesn’t make a whole lot of difference. It seems reasonable to say that those that are getting the benefits of education should bear some of the lionshare of the cost and if that necessitates borrowing than so be it.”
Like Cecil, American society believes that the best way to find a more stable job and achieve economic mobility is attending college. In most ways, it still is. But with the amount of student debt outpacing student enrollment, the dismal job markets, and stagnant mobility, it’s no wonder Millennials are shunning the old way of doing things.
What all of these averages and percentages mean is that there is an increasing gap between incentive and payoff for Millennials. And so, 26 million adults have turned to the people they have relied upon their entire lives: their parents.
A family affair
Over half of Millennials say their parents are their best friends. Everyone knows the quickest way to ending a friendship is by living together. Yet despite the fact that Millennials have taken the role of parasitic roommates, parents don’t seem to mind. Ninety-four percent of parents with Millennial children polled by Clark University say that the experience has been mostly positive or neutral. Sixty-seven percent even say that their relationship has improved since their child has moved back in. Fusion.net called the phenomenon the “Gilmore Girls-ification of America.”
And it is a phenomenon. Nearly the same majority of the 74 percent of parents surveyed who provide at least some financial support to their children “when needed” said they received little to no financial help from their parents. Times have changed, and the parents can feel it, though they may not understand it.
A majority of those parents, even those that fully support their child financially, believe that Millennials have an easier life than they did at the same age. They view the delay into adulthood as mostly negative. And they view the most important goal for Millennials as accepting responsibility for themselves, followed by finances, and education.
But Millennials are hardly concerned with their parents’ priorities. Millennials’ most important goals are emotional rather than financial. Pew Research Center’s “Portrait of Generation Next” report found that Millennials want to be good parents, have a successful marriage, work in a fulfilling environment, and help those in need before owning a home or having a high paying career.
The problem is that all of the things Millennials want seem to have been put on hold. Pew research shows that the waiting-to-marry trend is real. Only 26 percent of young adults are married by the age of 30, compared to the 55 percent 50 years ago.
Fishers, Indiana residents Betsy and Nick Schatko, both Millennials born in the late 1980s, started dating while they were still in high school in 2004, but it wasn’t until ten years later that they tied the knot.
The couple knew while in college at Indiana University they wanted to eventually get married, and when Betsy graduated in 2010 with a stable job in marketing she felt ready to take that step.
“I wanted to get married right after college, but I am so glad I waited,” Betsy said.
Thanks to help from her parents and some scholarships, Betsy graduated without student loans and with a high-paying job, so she felt ready to plan and pay for a wedding. But waiting was important to her then-boyfriend Nick, who was solely responsible for tuition, and all of his living expenses throughout his five years in college. He graduated in 2011 with a substantial amount of student loan debt.
“Nick wanted to wait because he couldn’t afford a ring,” Betsy said.
It was three years after Betsy graduated that Nick proposed and about a year-and-a-half before the wedding would actually take place, but “financially it made more sense” to wait, Betsy said.
“The hardest thing for me was watching many of my friends get married before me,” Betsy said. “But Nick had a lot of pride in the fact that he was able to buy the ring himself.”
The couple was able to finance a wedding in downtown Indianapolis, without going into a debt. But bring up the idea of having children with Betsy, and she’ll tell you that the roles reverse on this topic.
“If it was up to Nick, we would start having kids now,” she said. “I think I’m too selfish right now. I like my ‘me’ time, and I want to go a lot of places and see a lot of things before I have kids.”
And Betsy isn’t alone. Though Millennials’ relationships with their parents may be improved, and their primary goal is to someday be a good parent, Millennials aren’t having kids. Birth rates have dropped off significantly, especially for mothers between the ages of 20 to 29, according to the U.S. Department of Health.
But it’s not that Millennials don’t want these fulfilling life events. Adulthood, leaving the nest, growing up, has simply just been put on hold. Only 49 percent of the Millennials polled in the Clark University survey say they feel they have reached adulthood. In the meantime, they use placeholders. Better friendships and relationships with their parents replace marriage. Pets replace children.
Trying to find a way
Rachael Heffner lives less than five minutes away from her family home in Indianapolis where her father, stepmother, and younger sister live. After Rachael graduated from Ball State with a degree in creative writing in 2014, she moved back to the city, got her own apartment, started working two jobs at 60 hours a week, and is financially independent for the first time.
“I’ve learned who I am as a person,” Rachael said.
Rachael’s decision to move closer to home was an emotional one, not a financial one. But the move, she said, has made her closer with her family. She visits her family at least once a week, and believes her family has gained a respect for her.
“I’ve been saving money,” Rachael said. “I would like to move away and live truly on my own, even for a couple years. I would like to come back and settle in Indiana, maybe, but I think I need to experience more of the world before I settle down.”
Rachael’s optimistic tone is similar to that of most in her generation. In the same ‘Portrait of Generation Next” study, Pew Research found that Millennials believe their better future is just around the corner. They aren’t making enough money yet, but they will. The country may be coming out of a recession, but they’re generally satisfied. They may have been forced to move home, but at least it’s closer to the people they love. Millennials are trying to navigate this in-between stage of life after graduation. But it seems the path between here and there leads home first.