UNDATED – A Pew Research Center report based on data from the monthly Current Population Survey (CPS) showed that nearly half of 18- to 29-year-olds in the United States were living with one or both of their parents in March 2020.
Data released today from the 2020 Current Population Survey Annual Social and Economic Supplement (CPS ASEC) allows us to examine how such shared living arrangements affect the poverty rates of these individuals and their families.
While the Pew report focused on people ages 18 to 29, this analysis focuses on living arrangements and poverty rates among individuals ages 25 to 34.
A shared household is a household with at least one additional adult who is not the householder or the householder’s spouse or cohabiting partner. Individuals who are ages 18 to 24 and enrolled in school do not count as additional adults.
Examples of shared households include adult children living with their parents, married couples living with a parent, and roommates living together.
Individuals live in shared households for a variety of reasons, such as caregiving needs, benefits from pooling financial resources or short-term social and economic support during periods of acute hardship.
In 2019, there were 25.5 million shared households, making up 19.8 percent of all U.S. households.
The number of adults ages 18 and older living in shared households increased in 2019 to 81.2 million, representing about a third (32.2 percent) of all adults ages 18 and older.
Previous research by the Census Bureau found that the living arrangements of individuals ages 25 to 34 provide unique insights into the economic stability of young adults. Individuals in this age group have had the time to finish school, start working, and form their own households independent of their parents.
While the overall U.S. poverty rate declined in 2019 to 10.5 percent (down 1.3 percentage points from 2018), poverty rates for young adults (individuals ages 25 to 34) living in their parents’ households held steady at 5.3 percent. This was lower than the 10 percent poverty rate for all U.S. young adults ages 25 to 34.
The figure below displays the percentages of young adults in shared households. Of young adults ages 25 to 34, 38.4 percent lived in a shared household, a 1.4 percentage point increase from 2018. Meanwhile, 17.8 percent of all young adults ages 25 to 34 lived in their parents’ households, a 1.0 percentage point increase from 2018. These increases were not statistically different from each other.
Poverty status is determined by comparing a family’s total income to a threshold based on the number and ages of family members.
Since living in shared households is sometimes a response to economic distress, it is important to consider how living with parents or other relatives could affect an individual’s official poverty status.
The following examples demonstrate how these living arrangements affect poverty status.
Consider a family with an income of $20,000, including the combined annual income ($15,000) of both parents and the income ($5,000) of their young adult child. Under the official methodology, this family would not be considered to be in poverty, as their total family income is greater than their $19,998 poverty threshold.
In 2019, 5 percent of families sharing a household with related children ages 25 to 34 were in poverty, which is lower than the 7.8 percent poverty rate for all families.
the young adult child would be in poverty if living alone because their personal income is lower than the one-person poverty threshold of $13,300.
As shown in the figure below, 36.3 percent of young adults ages 25 to 34 living as additional adults in their parents’ household would have been considered to be in poverty (based on their individual incomes) in 2019. This is around seven times higher than when their poverty rates are based on shared family income.
The changes to poverty status that result from sharing a household are not limited to the effect on these additional adult children.
In our example, the parents would have been in poverty without their adult child’s income, because their joint income was below the two-adult threshold of $17,120.
In 2019, families sharing a household with related children ages 25 to 34 would have seen their poverty rates double from 5% to 10.5%, without including the young adults’ incomes.
Information provided by John Creamer an economist in the Poverty Statistics Branch. Emily Shrider is a survey statistician in the Poverty Statistics Branch and Ashley Edwards is chief of the Poverty Statistics Branch.