Many baby boomers who looked forward to becoming empty nesters have seen that dream crash and burn because their adult, millennial generation children have had to move back into the family home.
The Federal Reserve Bank of St. Louis report says “changes in household formation and economic dynamics during the past decade may be more than prolonged effects from the Great Recession.”
“Millennials who are overwhelmed with student debt, weak job prospects and an uncertain housing market are often moving back in with their parents or other family members,” Maria E. Canon and Charles S. Gascon wrote in the report. “Those who do ‘leave the nest’ and don’t return to it struggle to afford the down payment on a house; their rents are rising, making homeownership increasingly unattainable.
“The result is a lack of first-time homebuyers, which restrains the recovery in the housing market and, thus, overall economic growth.”
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The report shows that in the United States, 48.4 percent of 25-year-olds are living with their parents. They have an unemployment rate of 7.8 percent, which is above the national jobless rate of 5.1 percent. These young people nationally are also saddled with $27,342 in student debts.
“Nationally, almost half of 25-year-olds lived with their parents in 2012-2013, up from more than a quarter in 1999,” the report said.
In Missouri, the percentage of 25-year-olds living with their folks isn’t much better. The Federal Reserve Bank of St. Louis found that 43.9 percent of the state’s 25-year-olds were living with their parents. The unemployment rate for that group of millennials in the Show-Me State was 7.2 percent and the student debt that they were carrying was $26,401.
Because of the lingering long-term joblessness from the Great Recession, family tension in the nest may also be higher with the return of millennials in such large trend-setting numbers.
A separate Federal Reserve Bank of St. Louis report, authored by Alexander Monge-Naranjo, Faisal Sohail, notes that the people most susceptible to long-term unemployment have been millennials and their baby boom parents. From 1970 to the start of the Great Recession, which lasted from December 2007 to June 2009, the median duration of unemployment never went past 12 weeks.
“At the end of 2007, it was only eight weeks,” the report said. “After that, the median unemployment spell reached 25 weeks, more than twice the maximum since 1970.”
Long-term unemployment also was concentrated in an older group — people about age 50 — and a younger group — those about age 23. “Since the recession ended, the long-term unemployment rates for older and younger workers have stayed further above their prerecession rates than have the rates of middle-age workers,” the report notes.
That persistent joblessness among the two groups raises stress in the family nest where adult, millennial children have to live with scarce resources and the political trend of governments like Missouri’s cutting back unemployment benefits.
“From the point of view of individual welfare, entering long-term unemployment can have lasting negative consequences for both young and older workers,” the report says. “Yet the nature of the effects can be quite different.
“For younger workers, who are in the early stages of their careers, the ‘scars’ from long-term unemployment may have a long-lasting impact on their lifetime earnings. For older workers, long-term unemployment would have a smaller impact on lifetime earnings, but the consequences could be catastrophic for those with low assets and who were counting on the last years of work to save for retirement.”
For the sake of peace and tranquility returning to homes, we can only hope that the country continues to claw its way back to full employment so the adult kids will move into places of their own and baby boomers can finally enjoy that dream of being empty nesters.