The Kids Aren’t Alright: More Millennials Are Living with Their Parents
Pity the millennial, poster child of the Great Recession. A popular meme portrays the typical millennial as a basement-dwelling economic loser, forever condemned to live in the nether regions of his parent’s house. Unfortunately, that meme is not without basis. The recession seem to have hit millennials particularly hard, making it even more difficult for young people to find good jobs and to establish their own households.
In some respects, things are looking up for millennials. The U.S. job market is strengthening, making it easier to find work, and wages are starting to creep higher. The unemployment rate for young adults (ages 18 to 34, excluding full-time college students) has been heading lower since peaking near 12 percent in 2010; the latest unemployment reading for millennials is 7.7 percent.
However, there is one notable sticking point, and it echoes that basement-dwelling meme. Even though household formation rates have rebounded overall, millennials are still not moving out and establishing their own households like they used to. In fact, more millennials are living with parents or relatives than before the recession, according to new research from Pew.
In 2007, before the recession hit, 71 percent of millennials were living independently. In 2015, that number has fallen to 67 percent, with no sign of bottoming.
On the flip side, 22 percent of young adults were living in their parents’ homes in 2007. That number has risen to 26 percent this year.
The Pew report doesn’t look at why millennials are sticking so close to home. However, it does suggest that the relatively simple economic argument about the lack of good jobs no longer tells the whole story. Since the economy is recovering, however unevenly, there are likely other factors in play. One could be cultural: More young people simply enjoy living at home and are in no hurry to move out. Perhaps the U.S. is becoming more like Italy, where adult children often live at home until they marry.
That’s not to say that money plays no role in the trend, though. One big economic factor not addressed in the Pew report is pretty basic: rising rents. This graphic from Zillow makes it clear that rents have been soaring all over the country. More than $3,000 for a one bedroom in San Francisco? With those kind of numbers, living at home makes all the sense in the world.
Marco Rubio Says There’s No Proof Tax Cuts Are Helping American Workers
Sen. Marco Rubio (R-FL) told The Economist that his party’s defense of the massive tax cuts passed last year may be off base: “There is still a lot of thinking on the right that if big corporations are happy, they’re going to take the money they’re saving and reinvest it in American workers,” Rubio said. “In fact they bought back shares, a few gave out bonuses; there’s no evidence whatsoever that the money’s been massively poured back into the American worker.”
For Richer or Poorer: An Updated Marriage Bonus and Penalty Calculator
The Tax Policy Center has updated its Marriage Bonus and Penalty Calculator for 2018, including the new GOP-passed tax law. The tool lets users calculate the difference in income taxes a couple would owe if filing as married or separately. “Most couples will pay lower income taxes after they are married than they would as two separate taxpayers (a marriage bonus), but some will pay a marriage penalty," TPC’s Daniel Berger writes. “Typically, couples with similar incomes will be hit with a penalty while those where one spouse earns significantly more than the other will almost always get a bonus for walking down the aisle.”
Trump Administration Wants to Raise the Rent
Housing and Urban Development Secretary Ben Carson will propose increasing the rent obligation for low-income households receiving federal housing subsidies, as well as creating new work requirements for subsidy recipients. Some details via The Washington Post: “Currently, tenants generally pay 30 percent of their adjusted income toward rent or a public housing agency minimum rent not to exceed $50. The administration’s legislative proposal sets the family monthly rent contribution at 35 percent of gross income or 35 percent of their earnings by working 15 hours a week at the federal minimum wage -- or approximately $150 a month, three times higher than the current minimum.” (The Washington Post)
New Push for Capital Gains Tax Cut
Anti-tax activists in Washington are renewing their pressure on lawmakers to pass new legislation indexing capital gains taxes to inflation. The Hill provided an example of such indexing that Grover Norquist recently sent to Treasury Secretary Steven Mnuchin: “Under current policy, someone who made an investment of $1,000 in 2000 and sold it for $2,000 in 2017 would pay capital gains taxes on the $1,000 difference. But if capital gains were indexed, the investor would only pay taxes on $579, since $1,000 in 2000 would be equivalent to $1,421 in 2017 after adjusting for inflation.” Proponents of indexing say it’s just a matter of fairness, but critics claim that it would be just another regressive tax cut for the wealthy. Indexing would cost an estimated $10 billion a year in lost revenues. (The Hill)
Bernie Sanders to Propose Plan Guaranteeing a Job for Every American
Sen. Bernie Sanders (I-VT) is preparing to announce a plan for the federal government to guarantee a job paying $15 an hour and providing health-care benefits to every American “who wants one or needs one.” The jobs would be on government projects in areas such as infrastructure, care giving, the environment and education. The proposal is still being crafted, and Sanders’ representative said his office had not yet come up with a cost estimate or funding plan. Sen. Kirsten Gillibrand (D-NY) last week tweeted support for a federal jobs guarantee, but Republicans have long opposed such proposals, saying they would cost too much. (Washington Post)