Failure to Launch

by Dan McCue
Research Manager

With graduation season behind us, millions of newly minted college graduates will be returning to live in their parents’ homes. For some, it won’t be just for the summer. According to the US Census Bureau’s American Community Survey, at last count in 2011, fully 41 percent of college graduates under age 25 lived at home with their parents (Figure 1) along with 18 percent of graduates aged 25-29.

Source: JCHS tabulations of US Census Bureau, 2011 1-Year ACS.

As the figure shows, many college graduates have come to be known as “boomerang children” - those who, instead of venturing out and forming their own household after graduating college, return to live with their parents.  Since the recession began, the term boomerang children has become well known, largely because the situation has become so common.

Source: JCHS tabulations of 2007 and 2011 1-year ACS.

In 2011, there were 16.5 million 18-24 year olds living with their parents and another 4.9 million aged 25-29.  Combined, that’s over 2.9 million more young adults living with their parents in 2011 compared to four years earlier, before the Great Recession. While population growth has helped lift these numbers, the increase in the share of young adults living with their parents in 2007-11 has meant that, among those aged 25-29 alone, there were nearly a million (945,000) more adults living with their parents in 2011 than there would have been had 2007 population rates held constant, while for adults aged 18-24, there were fully 1.2 million more.

Such large numbers living in what many parents and children alike would call an unsustainable situation are why boomerang children are now being looked at as a possible boon to household growth.  As these young adults start to move out of their parents’ basements, they add so-called “pent-up” demand on top of normal household growth. However, a pent-up demand estimate requires an assumed return to earlier “normal” rates – and what is to be considered normal is a tricky thing to determine these days.  For example, if the change in rates of adult children living with their parents in 2007-11 had not occurred, 1.5 million more adults under 30 would have been heading independent households in 2011.  Assuming no change in rates in 2000-11 would lead to even higher estimates of pent-up demand.

Although a return to 2000 or 2007 rates may or may not be in the cards, mere stabilization of current rates will help household growth rebound. Indeed, population growth among 18-29 year olds was expected to push up the overall number of households by over 400,000 in 2007-11; it was the drop in rates of headship that led to the significant declines. With no more drops in rates of household headship, and no more increases in shares of adults living with parents, then population growth can take over again and return significant household growth levels among young adults, regardless of pent up demand. This fall, data releases from the Census Bureau and the Bureau of Labor Statistics will provide updated information that will shed light on whether or not such stabilization is starting to occur or, alternatively, if rates are heading in one direction or another.  Perhaps then we’ll be blogging about the growing number of empty-nester households.