AT 23, Jason McGuinness lives a postcollege life in Manhattan that is very nearly typical. He works as a media research analyst, making about $30,000 a year. Sharing a two-bedroom apartment on the fourth floor of a walk-up building with a roommate on the Upper East Side, his portion of the rent is $1,100 monthly.
$1,100 is about as cheaply as you can live in Manhattan. Jason's walk-up apartment is surely tiny and crappy. Yet still, how can a guy making only $30K per year afford it? Read on:
...like many of his peers — educated, employed, urban-dwelling young adults — he receives monthly assistance from his parents, in the form of a $300 check and the payment of his cellphone bill.
"Everybody I know is supporting their children in some way," said Gail Horowitz, Mr. McGuinness's mother, a vice president of the Zlokower Company, a public relations firm in Manhattan. Unlike young adults who "boomerang" back home to live with their parents — the subject of the recent comedy "Failure to Launch" — these young people live independently. But they need help to make ends meet, or put another way, to maintain a middle-class way of life.
And why is this happening?
Dr. Schoeni said his study suggests that extended education, the exploration of career options and delayed marriage are the causes of the long transition to self-sufficiency. Parental support "is not the driver of a delayed transition, it is a response to it," he said.
I believe that extended education does indeed play an important role. I don't buy into the delayed marriage argument. Just as likely the cause and effect works the other way, the inability of young people to support themselves independently discourages them from getting married.
But also, Dr. Schoeni misses a crucial point. As I expalained in previous blog posts, the income earned by young people is declining relative to older people, and this is especially true for young men.
At the same time that income is falling, the cost of housing has risen substantially, and the amount of student loan debt carried by the typical college graduate is at an all time high. This explains why young people need financial support from their parents.
What distinguishes the upper middle class from the lower middle class is that the latter's parents can't afford to give them support so they have to live at home. In this new era, social mobility is declining because living at home means that those young people are denied employment and social opportunities that could raise their social status. The cost of college education rising faster than inflation also leads to a decline in social mobility.