Women place greater importance on steady employment when seeking a spouse

Almost twice as many women as men consider it “very important” that their future spouse have a “steady job”.

… Never-married women place a great deal of importance on finding someone who has a steady job—fully 78% say this would be very important to them in choosing a spouse or partner. For never-married men, someone who shares their ideas about raising children is more important in choosing a spouse than someone who has a steady job.

Could it be that women still think they’d like to stop working when they have children?  Yes.  One recent survey found that 84% of working women want to stay home to raise their children.

———

Wendy Wang and Kim Parker, “Record Share of Americans Have Never Married”, Pew Social Trends, September 24, 2014.

Decline in teen birth rate

The teen birth rate in the U.S. is at a record low, dropping below 30 births per 1,000 teen females for the first time since the government began collecting consistent data on births to teens ages 15-19, according to National Center for Health Statistics data.

Why is the teen birth rate falling?

In addition to the correlation between declining birth rates and a distressed economy, other reasons have emerged.

 … Less sex, more contraception and more information.

For one thing, there has been a significant decline in the percentage of never-married teenage females who ever had sex, from 51% in 1988 to 43% in 2006-2010, according to National Survey of Family Growth data. Furthermore, among never-married teens who have had sex, 78% used a contraceptive method the first time they had sex, 86% used contraception during their most recent sex and 20% used dual methods (e.g., a hormonal method and a condom) during their most recent sex, all significant increases since 1988.

Pregnancy prevention programs and messages directed to teens may also have played a role. A recent Brookings report found that the MTV programs 16 and Pregnant and Teen Mom, reality TV shows that follow the struggles of teen mothers, may have contributed to up to a third of the decline in teen births since they began airing in 2009.

Teen abortion rate has also dropped.

But teen pregnancy rates have fallen, too, over the past 20 years. Looking at data reaching back to 1976, the pregnancy rate peaked among teens ages 15-19 in 1990, at 116.8, and has fallen 44% since then. The abortion rate among females ages 15-19 has also fallen over roughly the same time period—from 43.5 per 1,000 teens in 1988 to 16.3 in 2009. Of the roughly 700,000 pregnancies among teens in 2009, about 58% are estimated to have ended in live births, 25% in abortions and 17% in miscarriages or stillbirths.

The marriage status of teen mothers has changed dramatically since 1960.

… Back in 1960, most teen mothers were married—an estimated 15% of births to mothers ages 15-19 were to unmarried teens. Today, it has flipped:  89% of births are to unmarried mothers in that age group.

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Eileen Patten, “Why is the teen birth rate falling?”, Pew Research Center, April 21, 2014.

It’s mainly younger millennials who still live at home with their parents

Recent headlines broadcast the “record number of young adults are living with their parents“.  But it should be noted that the highest percentages of young adults still dependent upon their parents tend to be those who are under age 25.

The numbers that caught our attention

A new study from Pew Research finds that 36 percent of Millennials – young adults ages 18 to 31 – are living at their parents’ homes, the highest number in four decades. A record 21.6 million young adults were still living at home last year.

Let’s look more closely at the data.

College-age adults account for the higher percentages.  Only 16% of 25-31-year-olds live at home, while 56% of younger adults live at home.

Some reasons for the increase are:

• More young adults are attending college
• Poor job market
• Declining marriage rates

Being male, living in the Northeast, and lacking a college degree are all factors that correlate more closely with the likelihood of living at home.

• Millennial males (40%) were significantly more likely than Millennial females (32%) to live at home.
• Millennials in the Northeast (44%) were significantly more likely to live in their parents’ home than Millennials in other regions of the country. This partly reflects the fact that Northeastern Millennials were more likely to be enrolled in college than their counterparts elsewhere, as well as higher housing costs in the Northeast (Furstenberg, 2010)….
• Millennials who graduated from college (18%) were much less likely than less-educated Millennials to live at home. Millennials who have finished college tend to be older, but even within narrow age groups it remains the case that college-educated Millennials are the least likely to reside in their parents’ home.

Related:  No shame in living at home after college (usually) (Cost of College)

Average amount of parents’ contribution to college is about $10,000

What is the average amount of money provided by parents who contribute to their children’s college education?

Nearly 35 percent of young adults said their parents helped with college tuition, with those receiving help given an average of $10,147;

This comes from a University of Michigan study by Patrick Wightman and Robert Schoeni of the U-M National Poverty Center and Keith Robinson of the University of Texas at Austin.

More than 60% of young adults ages 19-22 received some type of financial help from their parents, averaging about $7,500 a year.  Children are taking longer to become “adults”.

“Young people in the U.S. are taking longer to leave home, finish their schooling, get stable jobs, get married, and have children,” says Wightman, who is the MacArthur Network on Transitions to Adulthood research fellow at the Gerald R. Ford School of Public Policy at U-M.  “And the slow transition to traditional adult roles has been accompanied by an increase in the financial support young adults receive from their parents.”

How parents help:

• About 42 percent of respondents reported their parents helped them pay bills, with those receiving help getting an average of $1,741;
• Nearly 35 percent of young adults said their parents helped with college tuition, with those receiving help given an average of $10,147;
• About 23 percent received help with vehicles (about $9,682 on average);
• About 22 percent received help with their rent away from home ($3,937 on average);
• About 11 percent said they received loans from their parents ($2,079 on average) and nearly 7 percent said they received financial gifts (average amount of $8,220).

Average figures blur the differences between how much high- and low-income families help pay for college.

“The gap is especially large for education related assistance,” he reports.  “While just 11 percent of low-income youth received tuition assistance from their parents, 66 percent of high-income youth did.  And among those who did get help, kids from high-income families received an average of $12,877, compared to $5,788 for those from low-income families.”

Parents tend to reward certain positive characteristics.

…  If parents reported that children age 12 and under were cheerful, self-reliant, and got along well with others, they were more likely to give them financial gifts or loans when they were young adults.

Parents have lowered their expectations about when adulthood should begin.

A round-up of scary public pension stories

This collection of stories about the public pension problem should get the attention of taxpayers and government employees relying on future pension payouts.  (Of course, these two groups are not mutually exclusive.)

Next School Crisis for Chicago: Pension Fund Is Running Dry (New York Times)

Illinois on the hook for $670 million more in teacher pensions for next budget (Chicago Tribune)

‘Exploding pension costs are the single biggest threat to local government’s ability to deliver needed services’ (Cost of College)

From the No Pension Bailout website:

State pension systems across the nation are dramatically underfunded.  Reasons vary, but in most cases state governments have failed to allocate sufficient money to their retirement systems. additionally states granted overly generous benefits to workers without proper regard for the cost of these benefits.

Recent calculations estimate unfunded pension liabilities to total roughly $2.5 trillion – creating state budget crises nationwide.  States are being forced to slash budgets for education, healthcare, and public safety to make room for the spiraling costs of pensions.  Some states are working to fix the problem, but others are not, instead content to wait for federal bailout of state pensions.  A bailout would force states with the resolve to fix their problems to subsidize those that prefer handouts – destroying state’s fiscal sovereignty and creating one of the largest transfers of wealth in the history of our country.

A problem with accounting methods used by state governments

State pension systems across the country are in a state of crisis. According to the Pew Center on the States, states estimated their unfunded pension liabilities at $757 billion in 2010.  Most pension experts, however, take issue with the standard actuarial methods used by most public pension plans, which lets state governments hide billions of dollars in pension debt. Under more reasonable accounting standards, states’ pension debt grows to more than $2.5 trillion.

Inflated discount rates hide true taxpayer liability

Economists Robert Novy-Marx and Joshua Rauh, for example, challenge the unrealistic investment targets and discount rates used by public pension systems to adjust their liabilities into today’s dollars. They found that the median discount rate used by the largest pension systems in the U.S. was 8 percent. This means that the pension funds anticipate earning 8 percent annual investment returns. Pension experts believe high discount rates encourage states to invest their pension funds in riskier assets in order to justify using inappropriately high discount rates.  In effect, using high discount rates allows government pension plans to hide hundreds of billions of dollars in pension debt from taxpayers.

These inflated discount rates have become so unreasonable that both the Governmental Accounting Standards Board and Moody’s Investors Service issued new rules in 2012 that require state governments to use more realistic assumptions. These new rules require governments to use discount rates closer to the yields from corporate and municipal bonds, which will provide a clearer look of pension finances. In Illinois, the new reporting rules will more than double the state’s officially-reported pension debt.

In the private sector, a guaranteed benefit must use risk-free returns in calculating future liability.  But for public pensions, the taxpayers are expected to meet the huge gap between overly optimistic promises and the reality of low investment returns.

As most experts explain, public pension funds should use lower discount rates to reduce the investment risk to taxpayers. This typically means that the discount rate should be based on risk-free returns, such as Treasurys. These discount rates would reveal that between half and three-quarters of all public pension debt is hidden by accounting gimmicks. If government pension plans were subject to the same reporting rules as private pension plans, their reported pension debt would nearly triple.

Do the math:
Median discount rate used by largest public pension funds – 8%
Current 10-year US Treasuries rate – 1.6%

Progressives Sour on Chicago Teachers (Via Meadia)

…[T]he city of Chicago most certainly can run out of money. Things like extra money for music and art teachers could be great ideas or could be bad ones depending on where it comes from. But it’s not as if Chicago Public Schools is sitting on some giant pile of money that administrations have just been refusing to use. On the contrary, it’s actually sitting on a large unfunded pension obligation. . .

In our local school district, pension costs are soaring to make up for unreasonably optimistic pension promises.

… pension costs have risen more than 50% over the last two years and now account for 7.2% of the total budget, up from 5.1% in 2010-11.  This has meant ongoing cuts in student services as taxes are diverted to pay for pensions.  The trend is up, and by 2015 pension costs are expected to eat up 35 percent of property tax collections.

Parents have lower expectations for kids becoming financially independent

Parents have lowered their expectations about when adulthood should begin, according to a recent Pew survey.

… The survey finds that today two-thirds (67%) of parents of children age 16 or younger say children should have to become financially independent from their parents by the age of 22—down from 80% who felt this way in 1993.

The increased expectation that graduate school will be part of their education may be partly responsible for this change.

Most everyone thinks young adults have it harder these days.

… Young adults themselves feel things are more difficult now. And middle-aged and older adults agree it’s much harder to be a young adult today than it was a generation ago.

Strong majorities of all adults say it’s harder for today’s young people than it was for their parents to find a job (82%), save for the future (75%), pay for college (71%) or buy a home (69%). In some cases, middle-aged and older adults are even more likely than their younger counterparts to say today’s young people have it harder.

With the exception of paying for college, I’m not convinced young adults have it harder today.  Getting a job, saving, and buying a home were not all that easy for many of my generation.  At the risk of sounding like a grumpy old codger, I believe many young people feel more entitled today than in years past.  When it comes to “delayed gratification” today’s kids tend to think in terms of hours and days, not years.  Is this the result of technology and over-attentive parenting?

All that being said, there’s a good possibility my oldest will return to live at home after graduating college and therefore will not be financially independent by age 22.

Related:  No shame in living at home after college (usually)

No shame in living at home after college (usually)

Young adults living with their parents is on the rise, but it’s not always a bad thing.

“Few are proud to carry the stigma of a ‘boomerang kid’ — someone who moves back in with their parents after failing to make ends meet on their own. But the move makes a lot of financial sense, and could serve as a springboard that can get boomerang kids off to a flying start when they head back out into the cruel world.

Amanda Grad Meets World justifies boomeranging, describing how the plan is working for her. Thanks to help from her parents, she’s able to plot out her career without burying herself in debt.

‘Think about it — how many of you would rather be in debt up to your eyeballs instead of having the ability to put money away in the bank? How many of you would rather struggle, and I mean really struggle, during a Recession rather than taking it easy and trying to do things the smart way?

On the other hand, there are lessons to be learned  from early struggles that may prove valuable in the years ahead.  Let me put it this way.  Surviving hard times by depending on your own resources, both personal and financial, can help you gain the confidence that will buoy your chances of success during the next difficult episode in your life.  Because you know there will be more, right?

But it’s also true that  sometimes those rough early struggles can break your spirit, weaken your confidence, and set you back financially in a way that is difficult to recover from.

I am open to the possibility that my own kids will boomerang back home at some point, and I would be happy to help them if this happens.  However, I’ve seen unhappy, dysfunctional  cases of slacker kids postponing adulthood indefinitely while being enabled  by weak-willed parents.  I don’t want to fall into that trap.

Related articles

• Is it wrong to be your kid’s administrative assisstant? (costofcollege.wordpress.com)