A Nation of Moochers (24 page)

Part Five

MIDDLE-CLASS SUCKERS

Chapter 14

THE BANK OF MOM AND DAD

Tucked inside the massive health-care reform bill of 2010 was a symbolic cultural declaration: The new law allows children to stay on their parents’ health insurance plan up to the age of 26. In a sense, the law was simply catching up with the trend toward delayed adulthood as more twenty-somethings fail to launch.

But the bill also was a milestone: It codified in federal law the dramatic shift in the age at which young people should be considered independent by legally extending the right to continue to mooch off Mom and Dad for an additional half-decade. As more and more young people take a leisurely journey to adulthood, the ages of 18 and 21 increasingly lack relevance for the actual path to independence. With a stroke of the pen, 26 has become the new 18.

In an earlier book, I wrote: “Previous generations crossed the frozen Bering Straits, rounded the Cape of Good Hope, discovered the New World, traveled the Oregon Trail, climbed Mount Everest.” The Greatest Generation included teenage boys who went off to liberate Europe, island-hop through the Pacific, and defeat the Japanese Empire.
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“So far, though, the great pioneering move of Generation Me is to move back home to live with Mom.” This was perhaps somewhat unfair, but the failure to launch among young adults has become so widespread that it has inspired its own euphemisms: “emerging adults,” thresholders, twixters, and kidults. None of them should be taken as compliments.

Somehow previous generations were able to grow up more quickly under far worse conditions. So did their parents, who not only didn’t have the Internet and cable television, but may have felt themselves lucky to have their own bedroom and indoor plumbing. But they grew up, and if they did live with their parents, they were probably helping to support the seniors, not the other way around.

A great deal of impressive scholarship has been arrayed to explain why the younger generation is delaying adulthood into their late twenties and even into their thirties. Traditionally, young people couldn’t wait to get out of the house, get their own place, and experience the freedom and pride of self-sufficiency and self-reliance. But now so many are failing or refusing to leave home that sociologists and demographers have had to redefine adulthood itself. In 2004 a team of social scientists concluded that “it takes much longer to make the transition to adulthood today than decades ago, and arguably longer than it has in any time in American history.”
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Explanations abound: Changes in the economy, the increasing importance and length of higher education, and delays in marriage and childbearing certainly play major roles in the postponement of adulthood. Even though most Americans think the age of 21 remains a key milestone, the MacArthur Foundation’s Network on Transitions to Adulthood notes that in reality, by age 21, “few young people today would actually be considered ‘adult’ based on the traditional markers—leaving home, finishing school, starting a job, getting married, and having children. More youth are extending education, living at home longer, and moving haltingly, or stopping altogether, along the stepping stones of adulthood.”
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In the 1960s, 37 to 40 percent of young adults finished school, left home, got jobs, married, and had children. Today the routes are more idiosyncratic. According to the Network on Transitions study, the number of young adults who follow that path had dropped to 25 to 29 percent in the 1990s.
*
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The “more ambiguous and extended path” they are taking means that many young adults who are technically past the age of majority have no idea what to do with themselves. The study found that “fewer young people at age 22, much less someone in their teens, know what they are going to do in the next 10 years than they did even a few decades ago.”

Sooner or later, of course, they will have to grow up, stop mooching off their parents, and actually move out of the house. But apparently not yet.

The number of so-called boomerangs—adult children between the ages of 18 and 24 who move back home—is up by 50 percent since 1970. Census figures suggest that 56 percent of men and 43 percent of women between the ages of 18 and 24 continue to live with a parent. Even more continue to rely on the bank of Mom and Dad, well past the age when grown-ups were once expected to pay their own way.

Send Money

“Helicopter parents” have made themselves unavoidable presences throughout academe and even (cringingly) in the workplace. So called because of their tendency to hover and overprotect their children, the helicopter parent has become an iconic figure of postmodern culture, representing a new sort of parent who never … lets … go. A plague on college administrators, these parents are so omnipresent at orientation sessions that some schools have had to develop tactics for shooing them off campus so that their children can get on with the business of higher education.

But just as helicopter parents are reluctant to let go simply because a child goes off to college, many parents seem reluctant to encourage or even allow their children to become financially independent. Understandably, many young adults are fine with this. Increasingly parents do not merely follow their children on Facebook, but also routinely pay their bills well into their thirties.

According to the MacArthur study, adults between 18 and 34 receive an average of $38,000 in cash from their parents, “and … this support has increased substantially in the last decades.”
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The cash, reported
The New York Times,
“helps to pay for housing, bills and travel expenses, and the support has been increasing for the past two decades as education is extended, marriage is delayed and young people take the scenic route from adolescence to adulthood.”
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Researchers Robert Schoeni and Karen Ross put this in perspective: Middle-class parents can spend $190,980 raising a child through age 17, according to 2005 government statistics, but they will probably spend another $42,280 (in 2005 dollars) over the next seventeen years. Obviously that includes the cost of higher education, but it is not limited to tuition. Their research found that on average, middle-class parents were paying $2,323 a year to subsidize offspring 25 and 26 years old.
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The contributions are not limited to cash. Nearly half of young adults (18 to 34) who live away from home report receiving noncash assistance from their parents in the form of time, such as “driving them home to the city after a visit, doing laundry, taking care of grandchildren.”

According to Schoeni and Ross, this parental time assistance amounts to an average of 367 hours, the equivalent of nine weeks of full-time mommy and daddy work.

“The bottom line,” noted the
Times,
“is that the assumption that financial obligations to children ended after graduation from high school or college is going the way of the pay phone.”
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Extending Dependency

Not all of this is bad, of course. The delay of childbearing and more and better education are often good choices that ought to be encouraged, but there are troubling implications as well. The delay of adulthood suggests a declining premium on independence among the young, for with the parental subsidies come strings. Avoiding those strings has long been the goal of young people leaving the nest. For many, however, the lengthening path to adulthood means the extension of parental involvement, and ultimately control. Most young people of previous generations were reluctant to make the tradeoff, but an increasing number of the younger population appear quite comfortable with it.

One result is that adults—even those in the middle and upper middle classes—spend less time being economically independent and a larger portion of their lives dependent on others.

This shift has significant demographic and political implications: If 30 is the new 20, the time a worker will be economically self-sufficient can be cut by nearly a fourth unless they stay employed a decade longer. As the younger generation takes the “scenic route” to adulthood, the burden of supporting the economy will be pushed onto an even smaller slice of productive taxpayers. (This was the generation that boomers were counting on to support them in their retirement. Disappointment seems inevitable, although they may get their revenge when young adults make the transition from moocher to mooched upon.) Statistics on income and wealth will also be skewed as the number of people (even those from affluent backgrounds and with expensive educations) who will be counted as “low income” is inflated.

Politically, the delay in adulthood means the shift of millions of individuals, who would otherwise have experienced the joys of tax withholding, into a prolonged period of dependency—not just on Mom and Dad, but also on programs that enable them to pursue what Fred Siegel called “dependent individualism.” (See “Hungry Hipsters” in Chapter 6.) Such dependency establishes not only a habit but also a constituency for programs of support by expanding and extending the pool of takers.

Chapter 15

MIDDLE-CLASS SUCKERS

Three stories:

• In Wisconsin, if a single mother with two children who makes $15,000 a year marries the father of her children, who makes $30,000 a year, a legislator calculates, “she will lose government benefits totaling $37,000 per year.”
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• Two classmates both take out $40,000 in student loans. Student A takes time off to find himself and then takes a minimum-wage job at a nonprofit group devoted to saving the iguanas. Student B gets a job in engineering and makes $70,000 a year. Student A pays $47 a month on his student loan; Student B pays $672. Student A is also eligible for the Earned Income Tax Credit program and food stamps and gets free medical care. After ten years working for Save the Iguanas, Student A also will have his loan completely forgiven under the “public service loan forgiveness” provision of his loan. Student B will have to pay off the full balance of his loan, plus interest.
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• Under the new health care bill, a middle-class couple in their forties who get a raise from $93,000 to $94,000 in 2014 could see their net income fall drastically as they lose more than $8,800 in federal subsidies for their health insurance. By getting the small raise, more than a quarter of their net income will go to pay premiums.
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They will, of course, also be paying federal and state taxes to subsidize other people’s coverage.

The reverse is also true in each case: If the Wisconsin woman refuses to marry the father of her children, she can keep her $37,000 share of government aid. The student who gets a well-paying job can quit and let taxpayers subsidize his student loan; a middle-class couple who decides to cut their income will be able to increase their health subsidy by thousands of dollars.

For both the poor and the middle class, the array of means-tested programs often means that more is less because they have benefits that phase out as income rises. Some of those benefits fall off a cliff—all the way to zero—if individuals or families make even a dollar more. Even without increases in marginal tax rates, the effect can be huge penalties for effort and success.

At some point for both groups, the American Dream no longer makes sense because of the perverse incentives: The more you earn, the less you can cadge from the taxpayers, which in many ways mirrors the effects of progressive taxation under which the more you earn, the less you get to keep. In some cases there is an actual tipping point where a higher income can leave both the poor and middle class worse off financially.

Welcome to the Muddle Class

In October 2009,
Forbes
magazine devoted its cover story to an eye-opening examination of the middle-class squeeze: “When Work Doesn’t Pay for the Middle Class.” The article featured a 50-year-old single mother who was seriously considering taking a job that paid her half the $120,000 salary she had earned at her last job as a publicity manager. The choice to take a 50 percent pay cut reflected the tight job market, but also “makes sense when you consider how this country punishes work effort.”
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Explained
Forbes
: “While the first $60,000 of her income would be lightly taxed, the next $60,000 would be hit with what is in effect a 79% tax rate. Given a choice between a part-time or easy job paying $60,000 and a demanding, stress-ridden job paying $120,000,” the woman would be better off taking the former. Why? The authors ran the numbers:

“At $120,000 she would pay $16,500 a year more in federal and state taxes, wouldn’t qualify for the five-year $12,000-a-year cut in her mortgage payments she’s applying for and would be eligible for $19,000 a year less in need-based college financial aid.”

There are more than two dozen federal tax breaks that decline and eventually disappear when income goes up. When the woman’s income increased from $60,000 to $90,000, for example, she would lose some or all of the per-child credit, the college student credit, the Making Work Pay credit, eligibility for a homebuyer credit, along with deductions for her IRA and for student loan interest. Especially for the middle class, noted
Forbes,
the tax code has become “a blatant shell game. Congress gives with one hand and takes with the other.”
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