Actually, adults living with their parents is a great thing

Millennials reaped significant financial benefits by leaning on their parents longer than previous generations

Credit: Seinfeld

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The basic underlying argument of this blog is that big, intergenerational family communities are a good thing. “It takes a village…” is not just some idle platitude, but rather a description of the way most people in history have lived. And it’s not just about raising a child. It takes a village to make friends. It takes a village to find a job. It takes a village for anyone, adult or child, to lead a happy and fulfilled life.

In a piece for the Institute for Family Studies yesterday, I argued that (re)building family-based villages should be a top priority. News articles routinely point out that parents (among other groups) lack villages, but rarely explore the idea of bringing them back. But my point in the IFS piece is that if I’m starving I don’t want a substitute for food. I want something to eat. The same goes for a village: Why focus on a simulacrum when we could actually just try for the real thing?

But in today’s post, I want to go a step further beyond arguing in favor of villages and instead look at what you actually get if you have stronger, village-like intergenerational connections. So what do you get?

It turns out, you get richer.

That, at least, is the conclusion from a new research paper from the American Enterprise Institute and the Federal Reserve Board. The paper’s authors set out to determine if intergenerational progress has stalled and today’s younger adults are worse off than previous generations — as seems to be widely believed.

The researchers found that the popular view of millennial struggle is wrong. The finding is somewhat tangential to this blog so I won’t get into the finer details (read the paper if you’re interested!) but in fact millennials are now actually doing better financially than previous generations at the same age. This isn’t the first research to make that point — a paper last year found something similar — but the message has apparently yet to find purchase among the broader public¹.

Interesting as those findings are, though, the real reason I’m bringing up this new paper is because it also found that millennials benefited financially from sharing resources — a classic village behavior — with their parents for longer than previous generations. For Baby Boomers, 90 percent of the generation was independent from their parents by age 26. But by the time we get to millennials that age has risen to 31.

The paper actually hypothesizes that this lengthening period of dependence is one reason people think millennials are falling behind. Anecdotally, that makes sense to me; I’ve heard plenty of people lament that millennials have to live with their parents, for example, because they can’t afford to do anything else.

But the paper also points out that millennials weren’t just sitting around being bums while depending on their parents. Instead, the paper notes, they were “investing in their human capital” by getting college and graduate degrees in higher numbers than previous generations. Those investments later paid off.

Here’s the key point:

Millennials were able to achieve a higher financial standard of living than previous generations by sharing resources in their 20s (perhaps while continuing their education) and then continued to maintain this higher standard of living when setting off on their own in their 30s.

In other words, millennials’ dependence on their parents in their 20s actually helped them prosper. It gave them a kind of financial head start.

This makes sense. Imagine, for example, living with your parents in your 20s. If you would have been paying $1,000 in rent (it’ll be much more in an expensive city, or if you don’t have roommates), living rent-free in your parents’ house for just a single year means you could save $12,000. That’s a down payment on a house in an inexpensive metro area². If you live with your parents for 10 years, you’ll have saved $120,000 — a healthy down payment even in an expensive coastal city.

Not everyone can live with a parent, of course, but there are other ways older generations can support younger ones. Today, for instance, adults can stay on their parents’ healthcare plans until they turn 26. I was too old to take advantage of this rule myself, but I know people who are slightly younger than me who used it to take professional risks; freed from the need to get a job with healthcare in young adulthood, these friends could pursue careers that would otherwise have been impossible.

The list could go on. Even adults staying on their parents’ cellphone plans or Netflix accounts (RIP password sharing) is an example of one generation providing support to another.

The paper doesn’t get into all the specific ways millennials’ might have shared resources with their parents during their 20s. But the big takeaway here is simply that sharing resources was good and paid off down the road. Millennials are richer compared to other generations today because their parents supported them for longer. And these little proto-villages of parents and their young adult children are thus a case study in why villages evolved in the first place.

As a parent myself, I’m excited by these results. I’m a journalist, which is a rewarding job but not the world’s most lucrative field. It’s unlikely I’ll be able to buy my kids their first homes, or leave them a trust fund. But I might be able to let them live with me for longer, or lean on me in other ways, which could be worth tends of thousands of dollars. Even without a lot of cash, I can help my kids pass through their younger, leaner years and emerge more prosperous on the other side. Investing in a family village will give my kids a head start.

On a bigger scale, the obvious conclusion from these findings in my mind is that we should normalize, rather than stigmatize, multi-generational interdependence. Living with your parents is actually beneficial, and we should look for more ways for families to share their resources. For instance, if millennials end up more prosperous for having depended on their Baby Boomer parents, what does that mean for those parents? Ideally, it means they’ll also have family to help them when the time comes. It’s a two-way street.

Of course in the real world this all gets messier and more complicated. But the point I want to stress is that villages, apparently, work. There are real, quantifiable benefits when families work together and share resources across multiple generations. And on top of that, families don’t have to be dynastic, Kennedy-esque aristocrats to do this. Sometimes, the first step toward building a village is just letting your kid live in the basement during graduate school.

Thanks for reading to the end of this post. If you enjoy this blog, perhaps your friends and family will as well. But you’ll never know unless you share it.

Headlines to check out this week:

Protecting the Home Front: Why We Need a “G.I. Bill” For Homemakers

“A better model is one that America’s first wave of feminists suggested in the early twentieth century: treating America’s homemakers with the support and respect we treat her military. America needs a “G.I. Bill” for her mothers and fathers who have spent time on the “home front,” devoting themselves to the important work of the family.”

The Paradox of Stay-at-Home Parents

“One of the simplest ways to ensure that parents who want to stay home can do so is also one of the boldest: Pay them. This idea has come up before, as in the 1970s Wages for Housework movement; it argued that paying for domestic labor would acknowledge that housework is, in fact, labor. The U.S. has actually experimented with a limited version of this. As a recent report from the Niskanen Center think tank noted, a few states—beginning with Minnesota and Montana—have over the years offered low-income parents an at-home infant-care option, “where new parents who would otherwise be eligible for state child care subsidies while they work could instead opt to receive cash assistance to stay home with their infant child.”

1. The authors of the paper seem to anticipate pushback, and explore common counter arguments such as healthcare costs and student loans — noting that even when factoring in such burdens millennials are now doing better than their older counterparts.

2. Assuming you’re a first-time homebuyer using an FHA loan with 3.5% down, with $12,000 you could theoretically afford a house with a purchase price of about $342,000. Obviously you could choose to put more down on an even cheaper house and get a better mortgage rate, avoid PMI, etc. etc. And your income will be a factor in what monthly payments you can afford. But a single year of living rent-free is definitely enough to save up a down payment in an inexpensive city. And there are many cities in the Midwest and South where houses cost far less than $342,000 right now.