To Avoid Poverty, Share a Home with Family

Moving in with family members might provide fodder for Hollywood comedies, but it turns out that for many Americans, it serves a pretty serious purpose: protection against poverty. A recent report from the Pew Research Center likens the phenomenon to an “anti-poverty program” that Americans are enacting to insulate themselves from the dark side of the Great Recession.

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In fact, Pew found that that there are more multigenerational households today than ever before in modern history, with a total of about 51.4 million Americans living with relatives. That’s about 16.7 percent of all Americans, the highest percentage since the 1950s. (During World War II, shared housing was more common, with about 1 in 4 Americans living in a multigenerational household.)

Not surprisingly, Pew attributes the trend to the economy, particularly the high unemployment rates among young people. About 38 percent of young adults between the ages of 18 and 29 are currently unemployed or out of the workforce, Pew reports, which is the highest percentage in almost forty years.

As anyone who has experienced multigenerational living firsthand knows, there’s a downside, too—overcrowding. Pew notes that the average multigenerational household contains 4.3 residents, compared with the more manageable 2.4 of other households. Income in those bigger households isn’t always higher, either, since economic hardship is often what brings extended families under one roof. Pew found that median household income (after adjusting for household size) was lower among multigenerational households ($57,533 versus $59,002).

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The poverty rate, though, was lower among those multigenerational households (11.5 versus 14.6 percent), which demonstrates how helpful it can be to live with relatives. (The difference is even more striking among unemployed Americans, who face a 17.5 percent poverty rate when living in multigenerational households, compared with 30.3 percent for those in other types of households.)

The Pew report also found the following:

• Young people between ages 25 and 34 have ramped up their multigenerational living arrangements more than any other group, with 8.7 million living in multigenerational homes in 2009, compared with 7.4 million in 2007. That translates into about 1 in 5 young adults now living with a relative.
• Asians are most likely to live in a multigenerational home compared to other groups, with about one in four doing so. (The percentage among whites is 13.1 percent.)
• While heads of household typically earn about 85 percent of household income, in multigenerational households, they earn just under half of household income. Meanwhile, children under age 25 living with parents contribute about 25 percent to household income.

Have you moved in with relatives to help alleviate financial stress, and if so, did it help?

Twitter: @alphaconsumer

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