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June 2001 Issue (Cover Story)

ECHOBOOMERANG
A new generation of college graduates is proving
that you can go home again.

After five years of college, Joe Fisher graduated from Northeastern University last June with two goals in mind: to find a job in the entertainment industry, and to move back home with mom and dad. But even after landing a job at Nickelodeon as a production assistant in November, the 23-year-old from New York City continued to live with the folks. "No rent, no money spent on food, the luxury of a washer and dryer in the apartment," Fisher explains, listing the advantages of home living.

Fisher currently joins a population of 18 million 20-34 year olds currently living with their parents -- 38 percent of all young adult singles. In 1970, 9 percent of men and 7 percent of women ages 25 to 34 lived at home; by 1998, those figures had risen to 15 percent and 8 percent, respectively. This rise in the homeward bound marks not only the transition of some 71 million children of Baby Boomers to adulthood, but a fundamental shift in how parents and adult children view their roles. And for marketers, it signals the emergence of a new and untapped market. The new generation of post-collegiate nesters, unencumbered by room-and-board payments, is financially savvy, ready to spend, and a growing consumer force.

"This is exactly the group of college graduates companies want to be talking to," explains David Morrison, president and founder of TWENTYSOMETHING Inc., a Philadelphia, Pennsylvania-based young adult consulting and research firm. "All the money that is normally spent on survival suddenly transfers into discretionary income and that translates into large screen TV sets, the latest consumer electronics, and brand-new sports cars. If you think about what this market aspires to buying, the people most able to afford [those items] are the college students who move back home."

The boomeranger buying binge has only just begun. Born between the years 1977 through 1994, the first of the Gen Ys -- or Echo Boomers, as they are sometimes called -- have only recently started trading their caps and gowns for work clothes. This year, some 670,000 or 56 percent of current college students plan to live with their parents for some period of time after they graduate: 19 percent for more than a year, according to a March 2001 poll. A Brown University professor notes, "[Returning to the nest] has gone from a relatively rare event to one experienced by nearly half of all those leaving home. Not only can young adults return home, it has increasingly become normative to do so."

What's prompting the turnaround? A fundamental shift in perspective between Gen X and their families and those of Gen Y and their Boomer parents.  Back in the recession economy of the early 1990s, basement-bound Gen Xers gaped hopelessly at an unfriendly job market, and considered their collegiate credentials useless at best. For the Silent Generation parents of Gen X, born in the wake of the Depression and World War II, a college education was considered a privilege, and ensuring that their children could attend college was essential. So when Gen Xers shuffled home with their "worthless" diplomas, parents reacted with a combination of resentment, worry, frustration, and despair. Tuition seemed like a waste, their kid couldn't get a job, or worse, college had transformed their prospective doctor/CEO offspring into a member of the dreaded slacker set. Having an adult child in the house was not considered a happy arrangement. Today's Boomer parents also have high expectations, but they are different expectations and are enforced in less rigid ways.  Unlike their folks before them, today's moms and dads see little problem in letting grown-up kids take up temporary, extended, or periodic residence in their homes.

[All of this] means marketers should start paying more attention. TWENTYSOMETHING's Morrison thinks that Gen Y's pragmatic and goal-oriented attitude, combined with their income boost from living at home, makes ignoring this group a mistake. "A lot of marketers' own assumptions lead them to overlook this market because they still see a stigma to moving back home." He adds, "This is a big trend and it's just waiting to be capitalized on." Morrison suggests that given Gen Y's optimism and long-term approach, marketers focus on their aspirational needs -- giving them products and services that enable them to get where they want to go.

Is the back-to-the-nest trend here to stay? Living at home may be transitional, but the tendency to do so looks permanent and may become even more pervasive. The fact that the rate remained steady through an era of unprecedented prosperity means that while economic opportunity isn't a deterrent to returning home, stagnation or recession may prove an added impetus. With the stigma of living chez mom and dad stamped out, college graduates will be increasingly happy to do so -- and ready to reap the rewards.

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Abbreviated Version
© 2001 Media Central/PRIMEDIA