Five years into the economic recovery, things are looking up for young adults in the U.S. labor market. Unemployment is down, full-time work is up and wages have modestly rebounded. But, according to a new Pew Research Center analysis of U.S. Census Bureau data, these improvements in the labor market have not led to more Millennials living apart from their families. In fact, the nation’s 18- to 34-year-olds are less likely to be living independently of their families and establishing their own households today than they were in the depths of the Great Recession.1
In terms of sheer numbers, there are more young adults today than there were when the recession hit – the 18- to 34-year-old population has grown by nearly 3 million since 2007. But the number heading their own households has not increased. In the first third of 2015 about 42.2 million 18- to 34-year-olds lived independently of their families. In 2007, before the recession began, about 42.7 million adults in that age group lived independently.2
The declining numbers reflect a decrease in the rate of independent living during the recovery. In 2010, 69% of 18- to 34-year-olds lived independently. As of the first four months of this year, only 67% of Millennials were living independently. Over the same time period, the share of young adults living in their parents’ homes has increased from 24% to 26%.
Meanwhile, the national unemployment rate for adults ages 18 to 34 declined to 7.7% in the first third of 2015, a significant recovery from the 12.4% who were unemployed in 2010. Other standard benchmarks also demonstrate that nationally the young adult labor market has strengthened. Both job-holding and full-time employment have increased since 2010. In addition, median weekly earnings among young adult workers are up marginally: $574 through the first four months of this year, up from their 2012 low of $547.3
In spite of these positive economic trends and the growth in the 18- to 34-year-old population, there has been no uptick in the number of young adults establishing their own households. In fact, the number of young adults heading their own households is no higher in 2015 (25 million) than it was before the recession began in 2007 (25.2 million). This may have important consequences for the nation’s housing market recovery, as the growing young adult population has not fueled demand for housing units and the furnishings, telecom and cable installations and other ancillary purchases that accompany newly formed households.
The decline in independent living since the recovery began is apparent among both better-educated young adults and their less-educated counterparts. For example, today 86% of college-educated 25- to 34-year-olds live independently of their families. In 2010, 88% of this demographic lived independently. A similar 2 percentage point slide in independent living is apparent among 25- to 34-year-olds with no education beyond high school. This suggests that trends in young adult living arrangements are not being driven by labor market fortunes, as college-educated young adults have experienced a stronger labor market recovery than less-educated young adults.
Trends in living arrangements also show no significant gender differences during the recovery. However, in 2015, 63% of Millennial men lived independently of family, compared with 72% of Millennial women. But a similar gender difference existed during the Great Recession, and both young men and young women are less likely to live independently today than they were five years ago.
No Recovery in Young Adult Living Arrangements
The latest available census data indicate that there has been no significant increase in the number of young adults living independently of their families since the economic recovery officially began.
As of the first four months of 2015, 42.2 million Millennials lived independently of their families. This is no different than the 41.9 million 18- to 34-year-olds who were living independently in 2010 and just below the 42.7 million young adults who lived independently in 2007.4
Over this same period the young adult population has swelled in size; today there are nearly 3 million more adults ages 18 to 34 than there were in 2007. Over the course of the recession and recovery the share of young adults living independently has also declined. In the first third of 2015, 67% of Millennials were living independently, compared with 69% of 18- to 34-year-olds living apart from family in 2010 and 71% in 2007.
Most of the decline in independent living since 2007 can be attributed to more young adults living in their parents’ homes. In the first third of 2015, 26% of Millennials lived with their parents. At the beginning of the recovery in 2010, 24% of young adults were living with parents, and in 2007 only 22% were.
The share of young adults who are living in “doubled-up” households has also increased in recent years. A doubled-up household is one in which there is an extra adult who is not the spouse or unmarried partner of the household head. Young adults living in doubled-up arrangements are of two types. Young adults not living independently are doubled-up because the young adult constitutes the extra adult. In addition, young adults living independently may also be doubled-up if they live with a roommate(s).
In the first four months of 2015, 48% of Millennials were doubled-up; in 2010, 47% of 18- to 34-year-olds were living in this type of household.
The 48% of Millennials who were doubled-up in 2015 includes 33% who were living in a household headed by a parent or other adult relative and 16% who were living in households headed by a non-relative or heading their own households with an extra adult (which may or may not include a family member).
Accompanying the growth in doubling-up has been a lack of growth in the number of households established by young adults. In the first third of 2015, 25 million Millennials headed their own households, no greater than the 25.2 million households headed by young adults in 2007. This has happened at the same time that the absolute number of 18- to 34-year-olds has increased from 59.8 to 62.6 million. In terms of the share of young adults running their own households, 40% do so in 2015, down from 42% in 2007.
The decline in the rate at which young adults are forming households from 2007 to 2015 has had a negative impact on the demand for the nation’s housing and, in turn, residential construction. Because of the recession, there are substantially fewer households than would have been predicted based on population growth; using CPS data through 2011 an economist estimated that the shortfall in the number of young adult households accounted for almost three-quarters of the total 2.6 million shortfall in households throughout the economy.5 In other words, young adults have been a key demographic in the nation’s housing bust. Four years later, the rate at which they are forming households is no higher than it was in 2011.
Young Adults and the Labor Market Since the Great Recession
The decline in independent living during the recovery has occurred in the context of a substantial, albeit incomplete, recovery of the labor market for young adults.6 On an annual basis, unemployment among 18- to 34-year-olds peaked at 12.4% in 2010. As of the first third of 2015, unemployment among young adults in this age group was 7.7%, nearly 40% below the peak. However, it was still above the 6.2% unemployment rate in 2007, before the Great Recession.
The unemployment rate only applies to those who are in the labor force and actively seeking work, thus excluding those who may have dropped out because they lost hope of finding a job. But other measures also indicate significant improvements in labor market outcomes for young adults, although the gains may be short of complete recovery.7
The share of young adults who are employed has increased from 69% in 2010 to 72% today. In addition, the share of young adult workers employed full-time has increased. In 2009, only 70% of 18- to 34-year-old employees worked full-time, the lowest share during the recession. By the first third of 2015, that share had risen to 74%.
Some evidence suggests that the earnings of young adults have begun to rebound. The median weekly earnings of young adult workers peaked at $592 in 2008 (all dollar figures are adjusted for inflation).8 After bottoming out at $547 in 2012, median weekly earnings are estimated at $574 in the first third of 2015.
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