Independence for young millennials: moving out and boomeranging back

Establishing an independent household has long been considered an important milestone in the transition to adulthood. During the 2007–2009 recession, fewer young adults were establishing their own households and more of them were moving back with parents after initially moving out. The share of men and women ages 18 to 34 living in their parents’ homes was larger in 2012 than in the early 2000s.¹

The decision to move out of the parental household may be affected not only by macroeconomic conditions but also by social factors and individual economic variables. For example, wealthier parents may transfer money to their children in forms that encourage either staying at home or moving out, depending on prevailing social norms and personal preferences. Living in the parental home may mean that parents subsidize housing costs; however, as children age, they may be less willing to accept this arrangement.² Likewise, a higher earnings potential may encourage a young adult to leave home.³ Conversely, poor employment conditions may create incentives for moving back as a way to hedge against labor market risk.⁴

Whether individuals leave or return home may affect aggregate housing demand, fertility patterns, labor force mobility, and demand for public services.⁵ Using the National Longitudinal Survey of Youth 1997 (NLSY97), this article explores the household formation experiences of young millennials (i.e., people born from 1980 to 1984) before age 27. It finds that while 90 percent of these individuals left their parental homes, more than half of them returned at some point after moving out. By age 27, close to 80 percent of millennials in this cohort were not in their parents’ homes. Leaving and returning home were related to labor market attachment and wages, as well as other individual and family characteristics. Young adults with relatively higher wages and better employment opportunities established and maintained household independence at higher rates.

Data and methods

The NLSY97 consists of a nationally representative sample of approximately 9,000 youths who were 12 to 16 years old on December 31, 1996. Between 1997 and 2012, these individuals were interviewed on an annual basis. The longitudinal nature of the survey allows us to determine the percentage of millennials who established household independence (i.e., moved out) or returned home. It also allows us to identify other characteristics of the individuals who made these transitions.

The NLSY97 documents the transition from school to work and into adulthood. It collects extensive information on youths' labor market behavior and educational experiences over time. Employment data include job start and stop dates, occupation, industry, hours worked, earnings, job search activities, and benefits. Education data include schooling history, performance on standardized tests, course of study, timing and types of degrees, and detailed accounts of progression through postsecondary schooling.

The NLSY97 also collects detailed information on the household in which the individual resided at the time of interview, including information about income, dwelling type, and relationships among household members.⁶ Since 2003, the NLSY97 has asked respondents to identify the date on which they first started living independently.⁷ With this information, we can ascertain whether an individual moved out of his or her parental household, even if we do not see the move in the annual snapshot for that household. In addition, the survey has asked respondents to indicate whether they have ever moved back home for a period of 3 months or longer.⁸ Moves back of shorter durations are not reflected in the data.

The analysis captures a respondent’s age on the date of the first move out and, if applicable, the first move back home. In addition, the analysis examines the household composition of all 27-year-olds to determine whether these individuals were still living with their parents. We weight all responses with the weights for the year in which a respondent turned age 27.⁹

Moving out

By age 27, 90 percent of young adults in the NLSY97 had moved out of their parents’ homes at least once for a period of 3 months or longer. The median age at the time of moving out was about 19 years. (See figure 1.)

View Chart Data

Figure 1. Percentage of young adults having first moved out and first moved back, by age

Age	Moved out	Moved back
< 16	1.6	0.3
16	3.8	.9
17	9.7	1.8
18	33.7	7.2
19	49.2	17.6
20	60.6	24.6
21	70.1	30.7
22	78.3	36.7
23	83.1	40.8
24	86.0	44.0
25	88.3	46.9
26	90.1	49.2
Source: National Longitudinal Survey of Youth 1997.

Table 1 shows that the likelihood of moving out before age 27 was correlated with several individual characteristics. Women were more likely to move out than men were, and Whites were more likely to move out than Blacks or Latinos. Generally, young adults with higher educational attainment tended to leave their parental homes at higher rates. Those with a General Educational Development (GED) credentials are an exception, as they were more likely to move out than were those with some college. Among individuals who took the Armed Services Vocational Aptitude Battery (ASVAB) examination,¹⁰ those with higher scores were more likely to move out.

The likelihood that a young adult will move out of the parental household before age 27 is also correlated with the characteristics of the household. Individuals in households that, at the first interview in 1997, had income in the bottom half of the income distribution (we adjust income for household size) were less likely to move out than were those in households in the top half of the income distribution. (See table 2.) In addition, those who lived in housing owned by their family in 1997 were more likely to move out than were those in families that did not own their dwelling. Individuals living in two-parent households with only one biological parent also moved out at higher rates than did those living with two biological parents, a single biological parent, or other household parent figures. This result supports research that shows that teenagers in stepfamilies move out of their homes faster than do teenagers in biological families.¹¹

Moving back home

For many young adults, moving out was not permanent. Among those who moved out, 54.6 percent moved back at some point before reaching age 27. (See table 3.) The median age at which these individuals returned home was 21. (See figure 1.) While individual differences in moving back were not significant by gender, they were significant by educational attainment. People with only a high school diploma were the least likely to move back, followed by those with some college.¹² In addition, Whites were more likely to return home than were Blacks or those of Hispanic or Latino ethnicity.

Young adults coming from families with higher household income in 1997 were more likely to return home. Among those in households with income in the top quartile, 57.7 percent returned home; of those in families with incomes in the lowest quartile, 52.8 percent did. Individuals who were living with two parents (with at least one biological parent) in 1997 were more likely to move back home. In addition, those who, before moving out, lived in a dwelling owned by their family were more likely to move back before age 27. (See table 4.)

Moving back home and out again

The majority of young adults who established independence and then moved back home were no longer living in their parents’ households at the time of the interview in the year they turned age 27. Still, 21 percent of 27-year-olds were living with their parents. Women were more likely to have reestablished independence than men were, and Whites were more likely to have done so than were Blacks or Hispanics. (See table 5.) Almost one-fourth of men were living in their parental home at age 27, compared with less than one-fifth of women. In addition, 27-year-olds with higher ASVAB scores or with a bachelor’s degree (or higher) were less likely to be living in their parents’ homes.

Individuals who, in 1997, lived in households with higher incomes or households that owned their dwellings were less likely to live in their parents’ homes at age 27. (See table 6.) In addition, those who lived with both biological parents or with a single biological parent were more likely to be in their parents’ homes at age 27 than were individuals in two-parent households with one biological parent or in households with other living arrangements (i.e., with adoptive or foster parents, grandparents, or other relatives).

Employment

Establishing and maintaining household independence were associated with higher wages at ages 23 and 27, as well as with a greater wage growth from age 23 to age 27. (See table 7.)¹³ By age 27, independent youths were earning 15 percent more than were their counterparts living with parents.

In addition, those who were not living at home by age 27 were more likely to have worked more weeks than were those without independence. While individuals with established independence worked 74.0 percent of the weeks during the period from age 18 to age 27, those living with their parents worked 66.8 percent of the weeks. (See table 8.)

Conclusions

By age 27, a majority of millennials born between 1980 and 1984 had moved out of their parental homes. However, more than half of them had returned home after initially leaving, and over 20 percent were still living with their parents at age 27. Establishing independence seems to be associated with higher math and verbal aptitudes, higher levels of educational attainment, and greater income of the parental household. Some of these characteristics are also associated with returning home after moving out. For example, individuals with a bachelor’s degree were more likely to return home than were high school dropouts. Likewise, young adults coming from families with greater incomes tended to move back at higher rates.

In addition, establishing independence and maintaining it were associated with having higher wages and working more weeks over the period from age 18 to age 27. Most individuals who established independence and then moved back home were no longer in their parental households at age 27. Further, those who were white, had more education, or came from families with greater income in 1997 were more likely to reestablish independence by age 27.