High rent, low wages
Young adults ready to launch are now facing a host of challenges, including a cost-of-living crisis, industry layoffs and stagnating wages. And that’s not to mention skyrocketing rent prices. The U.S. median monthly rent costs $1,964 in January, according to Rent.com.
Anthony, who lives in California, where the median rent price shoots up to $2,941, argues he could never find a space as good as his parents’. He has a big room with enough space for a desk, a large computer screen and a bed. He argues that if he moved out, he’d have to pay $1,000 to $2,000 a month — for a much smaller space.
Most young adults starting out their career can’t afford to pay that much for rent. California’s minimum wage is $16 per hour, which means if Anthony worked 40 hours a week at that rate, he’s only making $2,560 a month before taxes — leaving him well short of the state’s median rent rate.
And while Anthony’s situation would be hypothetical, there are many young people faced with this exact dilemma: they can’t afford to live on a single wage. To make up for this discrepancy, nearly 40% of Gen Z have two or more jobs, according to a 2023 report by marketing data and analytics company, Kantar. Anthony himself is a certified nursing assistant and does freelance graphic design on the side. Plus he’s in school getting his computer science degree.
“Being single and living on your own is nearly impossible, unless you are grinding and just broke,” he explains in another video.
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How will this affect the parents?
Parents have their own feelings about their kids living at home. One Gen X mom took to TikTok to voice why she feels the conditions her young adult kids are facing are way tougher than the struggles she and her generation experienced. Letting her kids stay at home for as long as they need is her way to give them a leg up.
But others, like personal finance celebrity Suze Orman argue it's in everyone's best interest to let the youth figure it out themselves.
The Pew study discovered that 18% of parents report a negative financial impact due to their adult child living at home. What Orman fears most is parents putting off preparing for retirement for the financial sake of their adult children.
Orman pleaded with parents in a 2023 blog post to at least charge adult kids some form of rent. It doesn’t have to be a lot, but it needs to be something. Pew finds that this isn’t an unusual ask: 72% of adult kids do contribute to household finances in some way, whether it be the rent or mortgage (46%) or groceries and utilities (65%).
It may seem uncomfortable, but Orman argues it’s a net positive for both parents and kids.
“You can teach your adult kid the lessons right now that will help them avoid financial trouble when they launch into their own households,” Orman wrote in her blog post. “How is that not a loving lesson?”
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