Monday, July 07, 2014

Dorms as "Parents' Home": The long term trends for higher enrollment

by Bill McBride on 7/07/2014 09:44:00 AM

On Friday I noted an article by Derek Thompson in the Atlantic: The Misguided Freakout About Basement-Dwelling Millennials

More than 15.3 million twentysomethings—and half of young people under 25—live "in their parents’ home," according to official Census statistics.

There's just one problem with those official statistics. They're criminally misleading. When you read the full Census reports, you often come upon this crucial sentence:
It is important to note that the Current Population Survey counts students living in dormitories as living in their parents' home.
As Thompson noted, most of the recent increase in the percent living "in their parents' home" is related to living in dorms.

This is an important point since there is a long term trend for higher school enrollment (so we shouldn't "freak out" about the reported increase in young people living at home).

And higher school enrollment generally means lower labor force participation (as I've pointed out before, the decline in the overall labor force participation rate is due to several factors, but two of the most important are aging of the baby boomers and more younger people staying in school).

School Enrollment 18 to 19 years Click on graph for larger image.

This graph uses data from the BLS on participation rate, and the National Center for Education Statistics (NCES) on enrollment rates (most recent data for 2012).

This graph shows the participation and enrollment rates for the 18 to 19 year old age group. These two lines are a "mirror image".

Note: I added the participation rate for men and women too. One of the key labor stories in the 2nd half of the 1900s was the surge in participation by women.

School Enrollment 20 to 24 yearsThe third graph shows the participation and enrollment rates for the 20 to 24 year old age group.

Once again the participation rate is declining as the enrollment rate is increasing. The participation rate (all) was rising in the '70s and early '80s because of the increase in women entering the labor force.

So don't worry about the kids living in their parents' basements - they are actually living in dorms.  In the long run, more education is a positive for the economy.

Hey, the kids are alright!

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