THE BLOG

Avoiding Poverty: Why Millennials Move Back Home

10/08/2013 12:11 pm ET | Updated Dec 08, 2013

A recent report by the Census Bureau pointed out that in 2012, 46.5 million people in the United States lived in poverty. And that number had not changed significantly from 2011. The same report said that between February and April of 2013, 10.1 million young adults between the ages of 25 and 34 were additional adults in someone else's household. Of these 10.1 million young adults, more than half (5.8 million) were living with their parents.

Most striking however, was the data on poverty on this population: the bureau reported, "Young adults age 25-34, living with their parents, had an official poverty rate of 9.7 percent..." That rate reflects a much rosier picture than the nation's rate of 15 percent. However, the report goes on to say, "...but if their poverty status were determined using only their own income, 43.3 percent had an income below the poverty threshold..." That would mean that young adults would have an almost three times higher poverty rate than the rest of the nation.

The millennials have been charged as being the generation that's delaying adulthood. Everything from young adults moving back in with their parents after college to delaying marriage to being entitled have been characterized as traits of this generation, one that seems reluctant to grow up and is taking its time hitting the milestones that the previous generations hit much earlier. Yet the data above shows that it's not simply a matter of an entire generation deciding that they are not ready for milestones such as getting married, buying houses and having children. There are other factors at play that have led to those decisions. One big factor: the economy.

The financial crisis in 2008 and the subsequent recession are not too far behind and the consequences of that economic downturn are still reverberating today. One of those consequences was the increase in the unemployment rate for young adults. The unemployment rate for young adults, 18-24 years old and 25-34 years old, spiked after the downturn while the earnings for both groups decreased.

The economy explains some of the decisions that individuals in this age range make, including moving back home. The Census Bureau provided us with more detailed data that shows the following: the majority of the 5.8 million 25-34 year-olds living with their parents were employed (63.9 percent); 31.7 percent were high school graduates, while 26.1 had bachelor's degrees. The overall 10.1 million young adults living as additional adults in someone else's household also showed similar trends: 67.5 percent of this group was employed; 31.7 percent were high school graduates, and 26.5 percent had a bachelor's degree. Clearly, it's not simply a lack of employment that is driving these individuals to live in shared conditions.

A report from the Pew Research Center that looked at young adults living with their parents noted three main reasons for this trend: declining employment, rising college enrollment and declining marriages. However, it must be noted that there are some complications with the Census Bureau's definitions. For the first statistic, the concept of living as an additional adult in a household can also include having roommates. Second, the definition of living with parents is somewhat problematic as well. As this article in The Atlantic points out, college students living in dorms are counted as living in the parental home. So it makes sense that if students are going back to school because the economy isn't proving fruitful, the numbers of those living at home will increase.

But let's throw another wrench into the mix: 18- to 24-year-olds were asked by the Census Bureau if they were enrolled in school; before 2013, that question was not asked of 25-34 year-olds. Clearly that complicates things further because it doesn't take into account the possibility that individuals between 25 and 34 years old might be enrolled in school. However, the Census Bureau was kind enough to provide us that information for 2013: As mentioned earlier, 10.1 million adults aged 25-34 were living in someone else's household in 2013. Of these, 1.4 million (or 14.8 percent) were enrolled in school. A subset of this group are the 5.8 million young adults living with their parents. In this group, 966,000 (or 16.6 percent) reported being enrolled in school in 2013.

So though it's true that there are individuals in this age range who are in school, they are not the majority. The majority of these young adults are working but obviously, the work is not enough for them to support themselves. And if the options are to risk poverty or live with their parents, it seems an easy enough choice to pick the latter.