Moving Away From Your Parents Can Earn You a Higher Salary
But you could take a bigger salary hit if you lose your job.
Today in “this is way more complicated than the headline suggests,” an article from The Atlantic:
It could be helpful during bouts of unemployment, but it's also associated with lower-paying work.www.theatlantic.com
First, The Atlantic notes that young people who move away from their families to start careers “earn significantly more than those who stayed in their parents’ orbits.” They do not mention anything about where these orbits were or where these young people are moving to, but I’m already jumping to the conclusion that these young people are, in general, moving from smaller to larger cities. Right?
So the young people move away, they earn more, maybe they also pay a higher cost of living but it isn’t clarified, and then this happens:
As for whether proximity to one’s parents affected long-term earnings following a job loss, the researchers looked at workers who were employed full-time for at least two years and then lost their jobs due to layoffs or closings. They found an interesting pattern that held for young adults between the ages of 25 and 35: Those who lived away from their parents saw a large decline in earnings of $15,000 a year on average, and that’s just right after losing their jobs. Even after 10 years, they failed to catch up to peers who didn’t suffer a job loss during that crucial period. For those who lived near their parents, the story was different: Their earnings took a big initial hit as well after a job loss — around $10,000, on average. But importantly, their earnings recovered and caught up with their continuously employed peers within five years.
“The researchers,” in this case, are Patrick Coate, Pawel Krolikowski, and Mike Zabek, and their study Parental Proximity and the Earnings Consequences of Job Loss was published by the Federal Reserve Bank of Cleveland.
The study explains that young people who live near their parents might see a faster earnings recovery after job loss due to the following factors:
- Young people who live near their parents might have lower-paying jobs to begin with, making it easier to “recover” those lower earnings.
- Young people who live near their parents have the option of living with their parents, giving them the ability to conduct a longer job search and hold out for that better-paying, better-career-building opportunity.
- Young people living with or near their parents also have the benefit of their parents’ constant motivation and assistance. (I’m not sure I believe this, because there are plenty of parents who can text their faraway children “HAVE YOU FOUND JOB YET,” along with a link to an article they read about interview techniques.)
- Young people who live close enough to their parents to use their professional network might get more/better job opportunities than young people who moved away from their parents’ network.
That last factor is important, because all of these differences disappear after young people turn 35. By then, many young people have their own professional networks, along with work histories, career trajectories, etc. Whether they live near to or far away from their parents doesn’t affect their ability to find a new job after job loss, or to recover their former earnings.
But this leaves me with so many questions:
- So the most important thing a young person should do is build a professional network, right?
- How much higher are a young person’s earnings if they move away from their parents and don’t suffer a job loss between the ages of 25–35?
- What about cost of living, because that is IMPORTANT and not addressed AT ALL????
- And what about families where the kids move away but the parents continue to provide financial help? Because that’s a thing. Megan just wrote about it.
- What about when the parents move away? That’s also a thing. Adults move for their careers all the time, and my parents no longer live in my childhood hometown.
- So the most important thing a parent should do is move to a high-earnings area and build up a strong professional network so that their child will choose to stay in the area and have access to that network at the start of their career, right?
Like I said: this is way more complicated than the headline implies.