More Millennials Are Living With Their Parents: Is It Hurting the Economy?

A growing number of millennials are living with their parents. This is one of the findings of a Pew survey on Americans living in multi-generational family households.

According to the survey, young adults ages 25 to 34 (aka millennials) “have been a major component of the growth in the population living with multiple generations since 1980 — and especially since 2010. By 2012, roughly one-in-four of these young adults (23.6 percent) lived in multi-generational households, up from 18.7 percent in 2007 and 11 percent in 1980.”

It’s not necessarily that millennials love their parents nowadays more than ever and have hard time leaving the house. Apparently, there are number of reasons for this phenomenon, including millennials’ delayed entry to adulthood, but also, and probably mainly, economic reasons.

According to a State of the Nation's Housing report released last month by the Joint Center for Housing Studies at Harvard University “tight credit, high unemployment and record levels of student loan debt are moderating growth and keeping young people and other first-time homebuyers out of the market.”

So, this is good news, right? Millennials seem to adopt a more responsible economic behavior, avoiding the same reckless financial decisions that got so many people in trouble only a few years ago. And besides, aren't multi-generational households more sustainable? After all, they use resources more efficiently, serve as an economic safety net and may even help family relationships.

Well, not so fast. The reports on this trend widely present it as a problem rather than an opportunity. Why? Because by not buying houses, millennials are hurting the real estate recovery and a weak housing market has been a burden on the U.S. economic growth. Dina ElBoghdady and Emily Badger explained this connection on the Washington Post:

“The decisions they [the Millennials] make about their living arrangements will, by extension, affect the economy, which has traditionally relied on the housing market to create construction jobs and generate consumer spending for everything from dishes to furniture to pricey appliances.”

So the way this trend is framed in the media is something like this: Millennials living with their parents = one of the reasons for the slow growth of the U.S. economy = bad thing. Or as David Dayen puts it: “A 'kids living in the basement' economy simply has no vigor.”

In fairness, it’s not that anyone writing about this trend wishes for millennials to act recklessly or take risks they can’t afford. However, it seems like the expectations are that millennials will get back to ‘business as usual’ – i.e. get out of their basement, find a real job, get married, buy a house and start consuming like adults.

And this is the problem. The reports about the trend indicate that millennials’ behavior, which David Dayen calls on the New Republic “the Great Delay,” is abnormal and aspire for the return of the ‘normal’ and the sooner the better, but is this really what we should hope for?

I doubt that, and the reason is that the ‘business as usual’ everyone seems to be longing for is nothing but the same old economy model based on debt, consumption of stuff and everlasting growth. This model, as we already know is unsustainable and a recipe for trouble - at best it will provide some limited economic short-term, but more likely it will just pave the road to the next crisis.

So why do we still want it so much? Do we have such a short memory? Don’t we know better?

Apparently no, as Jo Confino, executive editor of the Guardian and chairman and editorial director of Guardian Sustainable Business explains:

“Because we have been raised in the current system, we unconsciously believe it is the natural order of things - rather than a social construct we can change. The economic system is like a mother and we, the babies are fearful of what would happen if we abandon her.”

I guess some of you might wonder at this stage what’s the alternative? Do I suggest that millennials will delay their adulthood forever and will stay as much as possible in their cozy basements?

The answer is: No. I don’t think Alan of The Hangover is the best role model for the millennials (and the same goes to any of the man-child characters in Judd Apatow’s films). At the same time, I don’t think we should look at multi-generational housing as a negative phenomenon that just stalls the economy. Instead, we should look at this trend more comprehensively, exploring its potential as a component of a more sustainable economy model, especially when it comes to aging populations.

Naturally, most millennials would eventually like to leave their basement, start their own families and purchase their own home. Yet, we should encourage them to follow a new path – not a 20th century model that is unsustainable and will put their wellbeing in risk, but a 21st century model that is based on sustainable principles.

It’s time to be honest and tell the millennials that the party everyone is encouraging them to join is over.  The dream of a big house is the suburbs with two cars, a secured job and life of overconsumption is a reflection of the past, not their future.

To paraphrase President Barack Obama, it’s time to do away with an economic model that belongs to the “Mad Men” era and start thinking in terms that are relevant to this era: steady state economy, sharing economy, sustainable development, design for social innovation and sustainability, and the responsible economy, just to name a few.

So, my fellow millennials, please don’t listen to the news and ignore the voices rushing you to leave the basement (unless these are your parents talking to you) and do it whenever you feel the time is right, i.e. you can actually afford it. Otherwise, it won’t be long before you return to the basement only to find out that your siblings (aka generation Z) have already claimed it.

Image credit: Faruk Ates, Flickr Creative Commons

Raz Godelnik is an Assistant Professor of Strategic Design and Management at Parsons The New School of Design. You can follow Raz on Twitter.