Why Does It Take Millennials Longer to Grow Up Than Prior Generations?
As more millennials accumulate student debt, fail to get jobs, and continue living with mom and dad, many are wondering why we are taking longer to “grow up” than previous generations. After all, we are the largest generation and the immediate future of our nation.
For the purpose of this article, let’s use a fairly conventional definition for being “grown up” and say that, by your mid-20s, you should be fully employed, beginning the process of buying a home, starting a family, and living independently of your parents. One could write a series of articles and debate endlessly how well this defines "growing up," but for now, let’s just focus on why we’re slow to reach these marks.
Unemployment and Underemployment
The biggest issue, and the one that affects all other factors, is the recession and the ensuing unemployment and underemployment of millennials. We recently heard that 13.1% of millennials are unemployed and that if the labor force participation rate were included, the actual number would be over 16% (NSA). Thirty-seven percent of millennials have been unemployed or underemployed during the recession.
Additionally, more students are graduating from college than ever before and fighting for jobs in a competitive job market. This forces many graduates to settle, even at the jobs they want, for less than what they might traditionally make. As a result, over the next decade, earnings could be 10% less than they'd be in a normal economy.
The Revolutionary Road Ideal
Considering everything I've just revealed, you probably won’t be surprised to hear that homeownership among millennials has fallen by 12% since 2006. Even for those who have purchased houses, in mid-2012, researchers at Zillow found that 48% of young homeowners are underwater or owe more to their mortgage than their house is worth. This means we are more likely to be underwater than elderly and middle-aged homeowners.
Maybe we just love renting? Not entirely. A recent Fannie Mae survey found that nine out of 10 millennials eventually want to own a place. If that’s true, then our reduced home buying is almost certainly due to a combination of underemployment, student debt (which is now over $1 trillion), and tighter loan restrictions by banks, rather than a lack of desire or ambition.
Marriage is also often a factor in a home-buying decision and we’re doing less of that, too. Only 21% of millennials are married, which is half the percentage of our parent’s generation at the same age. Between later home buying and later marriages, we’re not running towards Revolutionary Road ideals at the same pace as our predecessors.
Boomeranging and Continued Parental Support
An estimated one quarter of millennials currently live with their parents, including those who earned a degree and then “boomeranged” back home. Most of these boomerangers are moving back because of (what else?) the recession. Pre-recession, 14% of males and only 8% of females boomeranged back home, compared to the current 19% of males and 10% of females. With jobs down, the mentality is why rent a place on low (or no) wages, when you can live at home for free and cut on food costs?
Interestingly, while the societal standard may glorify total independence from parents, the societal norm is to continue to receive parental support, even as adults. Most adults in their 20s receive continued support from their parents. Only 25% of those parents claim to provide “intense support,” whether it is emotional, practical, or financial.
While there are several key factors in our generation’s lag, the recession has changed the scope of what millennials face in terms of employment, and as a result, we are slower to buy homes, plan a family, and move out of our parents’ houses. Are we redefining the timetable for “growing up,” or simply a stagnant generation?