- Most "boomerang kids" who moved back home during the pandemic are from high-income families, a new report found.
- They're more likely to stay unemployed longer and less likely to work jobs on the coronavirus frontline.
- It's intensifying the growing inequality gap and the labor shortage.
The pandemic evoked deja vu for many young adults: they were back living in their childhood bedrooms. But it turns out that such a refuge can be a good economic cushion.
More than half (52%) of Americans ages 18 to 29 moved back in with at least one parent at the height of the pandemic during 2020. A new report by the Federal Reserve Bank of Cleveland found that the majority of these "boomerang kids," which comprises the oldest Gen Zers and youngest millennials, are from high-income families that can help them "better weather economic shocks."
Analyzing the Current Population Survey, the bank found that 36% of boomerang kids are from families that earned more than $140,000 per year — the top 20% of the income quintile. Meanwhile, only 10% of boomerang kids are in the lowest income quintile of households earning less than $28,000 per year. And the majority of young adults who didn't live with their parents are from families earning incomes in the middle of this range.
This distribution indicates that families were able to potentially provide "financial insurance" to their young adult children, the report stated: "High-income households were likely more able to support an additional person living in the home compared to lower-income families because of both additional costs of adding a person and the space constraints of residences themselves."
But it's creating a lot of disparate effects among younger workers.
Students and knowledge workers
Boomerang kids were more likely to currently be in school than young adults who weren't living with their parents. It makes sense — many colleges closed their campus doors in a pre-vaccinated era, leaving many students who lived on campus with no other option but to return home.
That many of this cohort are students explains why they were also more likely to be unemployed. But even here, inequality rears its head again: higher-income boomerang kids were more likely to have a job than lower-income boomerang kids.
Boomerang kids in general tend to stay unemployed longer — 60% of young adults who moved back home weren't employed when they did so, although one-third eventually got a job. That's less than the 45% of young adults not living with their parents who were non-employed at the same time later became employed.
That's likely because they don't have the luxury of choice that parental economic support provides the boomerang cohort. Boomerang kids are more selective about the jobs they accept and are less likely to work in jobs where they would frequently be exposed to the coronavirus, the report found. In short, they're knowledge workers who can work remotely and can afford to wait until the right opportunity comes along.
Worsening inequality and the labor shortage
The divide has ultimately exacerbated two of the pandemic's big problems: the growing inequality gap and the labor shortage.
The rich only got richer, and saw their jobs recover after the short-lived recession. Meanwhile, lower-income workers struggled with job loss and paying bills, finding themselves on the frontlines of the coronavirus as essential workers. The wealth chasm resulted in a K-shaped recovery.
Workers going on strike for better conditions, a Great Resignation in which millions of Americans have quit their jobs, and a wave of employees calling out sick with Omicron have created the perfect storm for a vast shortage of workers. The report suggests that the growing inequality among younger workers is also a factor in that equation.
"This situation constrains the number of people willing to work in occupations with a relatively high risk of exposure to COVID-19, circumstances which, in turn, could create a shortage of workers in high-risk occupations that previously employed a high concentration of young workers," the report reads.
It looks like the socioeconomic ladder is getting harder and harder to climb.