Young people receive money from parents

From today's NY Times:

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.

Comments

[superdestroyer]

Isn't this the 21st century version of hiring your son or son in law at the factory. Since the wealthy have become knowledge workers, it makes it much harder for them to just hire their kids into the family business.

Thus, the alternative is to just give them money.

Another slant would be about how too many rich white kids want to be authors, film producers, or night club managers (read kareena Gore or Alexandra Kerry) instead of engineers or businessmen.

[Josh Cohen]

My sister is 25 and still lives at home, not paying room or board or utilities. She finally does pay for everything else -- cellphone, car, credit cards, et al -- but those didn't devolve from my parents to her until she was 23.

I went away to college (four hours away from home). The state paid my tuition. My parents paid my bills (food, phone, and eventually rent when I got an apartment) until I graduated and got a job. They help out here and there, and they gave us (me and my wife) a huge chunk of down payment money for our house, but since then they haven't gifted us with money "just because".

I think the mooch mentality referenced in this post can be traced directly to achievement. I achieved high enough grades to get a full scholarship to a school of my choice; my sister didn't try hard enough (I know; I lived with her) so she went to community college near home. I graduated with a BA and MA in six years; my sister got her AA in the same amount of time. I entered the world of work and have moved up to management; my sister worked part-time for a while, then got promoted to full-time manager but DIDN'T LIKE IT and got herself demoted back to part-time "troubleshooter", a very good job to have but still only part-time.

Getting away from your parents -- even if they pay for you to live away -- is huge. It teaches you how to live on your own in a practical environment. Boarding schools do a modicum of the same thing. But living with one's parents encourages the parents to do things for the child, even if the child is in her twenties.

Independence, I think, is key.

[Steve L.]

A couple of years back, Time Magazine did a piece on this issue. The majority of the kids living with their parents said things like, "I want to save my money until I can afford a nice house of my own." They then went out and bought new cars and boats and the like. They weren't exactly working toward financial independence.

Too many kids think that post-educational life should begin with the exact same standard of living as they enjoyed while in school. It should then proceed upward from there. Too many parents are happy to have their children still under foot. It becomes a mutually beneficial deal. The parents get to continue footing the bills and the kids get to go on with their lives.

Parents aren't doing the kids any favors by not teaching them to be self-sufficient. What happens if tomorrow, the parents die? Where are the kids then? They are still living in an apartment they can't afford only now, they don't have mommy and daddy's check coming.