Doubling up: America's economic double-edged sword

Source: Wall Street Journal

More people are living with family amid high unemployment rates and a slow economy, but while the phenomenon is keeping the poverty rate lower, it has wider negative economic consequences.

In a presentation as part of its wider report on income, poverty and health insurance, the Census Bureau noted a big jump in the number of individuals and families doubling up. Census says 69.2 million, or 30%, were doubled-up in 2011, up from 61.7 million adults, or 27.7%, in 2007. “Doubled-up” households include at least one person 18 or older who isn’t enrolled in school and isn’t the householder, spouse or cohabiting partner of the householder.

Much of the increase comes from young people, ages 25-34, living with their parents. Some 5.9 million, or 14.2% of 25-to-34 year olds, lived with their parents in 2011, up from 4.7 million before the recession.

“These young adults who lived with their parents had an official poverty rate of only 8.4%, since the income of their entire family is compared with the poverty threshold,” David Johnson chief of the Housing and Household Economic Statistics Division at the U.S. Census Bureau said. “If their poverty status were determined by their own income, 45.3% would have had income falling below the poverty threshold for a single person under age 65.”

Fewer households means fewer consumers for businesses desperate for demand. (You don’t need to buy a new TV if you can just use mom and dad’s.) At the same time, it continues to drag on a housing market that needs to burn off excess supply.

Meanwhile, the struggles of young adults can have a broad economic impact. Parents supporting adult children have less money to spend on themselves, not to mention less income to save for retirement.

To be sure, there is a silver lining if the broader economy can improve. Necessity is likely the primary driver of the increase in doubling-up. Many of these families and children living at home may want to make the jump out on their own as soon as their economic standing improves. That could represent a strong shadow demand for housing, as well as a potential jump in household formation with a resultant boost in consumption.

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