The Economics of Cohabitation

• by Jack Loechner , Staff Writer @mp_research, July 20, 2011

According to June 2011 data from the Pew Research Center, cohabitation is an increasingly prevalent lifestyle in the United States. The share of 30- to 44-year-olds living as unmarried couples has more than doubled since the mid-1990s. Adults with lower levels of education, without college degrees, are twice as likely to cohabit as those with college degrees.

Among 30-to-44-year-old US adults, college graduates who are not married but cohabiting with a partner earn more than any other married, cohabiting or single adults in this age group. In 2009, these adults earned an average of $106,400 per year. The analysis of cohabiting couples in this report is restricted to opposite-sex unmarried partners, making the assumption that these couples have the choice to marry or cohabit, which is not the case for most same-sex couples.

The typical college-educated cohabiter is at least as well off as a comparably educated married adult and better off than an adult without an opposite-sex partner. By contrast, a cohabiter without a college degree typically is worse off than a comparably educated married adult and no better off economically than an adult without an opposite-sex partner.

It also would seem that cohabitation would be associated with greater economic well-being than living without a partner because of the economies of scale achieved by combining two households, says the report. Yet adults without college degrees who cohabit are no better off than those who live without opposite-sex partners.

For the most educated, living as an unmarried couple typically is an economically productive way to combine two incomes and is a step toward marriage and childbearing. For adults without college degrees, cohabitation is more likely to be a parallel household arrangement to marriage, complete with children, but at a lower economic level than married adults enjoy.

Median Adjusted Household Income, 2009 (30-44 year-olds; with and without opposite sex partner or spouse)
Not College Graduate	Annual HH Income
Married	$56,000
Cohabiter	46,540
No partner	45,033
College graduate
Married	$101,160
Cohabiter	106,400
No partner	90,067
Source: American Community Survey, 2009, Pew Research Center, July 2011

Among the 30- to 44-year-old U.S. adults who are the focus of this report, 7% lived with an opposite-sex partner in 2009, according to census data. The share is higher among adults without a college education (8%) than among those with college degrees (4%).

The proportion of adults who ever have cohabited is much larger than the share currently cohabiting, and it has grown to become a majority in recent decades, according to data from the National Survey of Family Growth. Among women ages 19-44, for example, 58% had ever lived with an opposite-sex unmarried partner in 2006-2008, up from 33% among a comparable group in 1987 (National Center for Marriage and Family Research, 2010).

Partnership Status, 2009
Status	% of Respondents
Married	58%
Cohabiter	7
No Partner	35
Source: American Community Survey, 2009, Pew Research Center, July 2011

The Pew Research analysis finds that differences in employment rates and household living arrangements of cohabiters with and without college degrees help explain gaps in their comparative economic well-being. These differences include:

• Among the college-educated, two-earner couples were more prevalent among cohabiters (78%) than married adults (67%) in 2009. By working more, cohabiters offset married adults' higher median earnings.
• Among the college-educated, a much higher share of married adults (81%) than of cohabiters (33%) lived in a household with children in 2009. In addition, among those with children in the household, married adults tend to have more children. The greater presence of children in married-couple households may help explain the lower share of two-earner couples among married adults.
• Among those without college degrees, two-earner couples were slightly less prevalent among cohabiters (55%) than among married adults (59%) in 2009. In addition to being more likely to work, these married adults have the advantage of higher median earnings.
• Among adults without college degrees, the majority of both married adults (85%) and cohabiters (67%) have children in the household. The relatively large presence and number of children in the households of cohabiters without college degrees may reduce the extent to which both partners in such relationships can earn income.

About 400,000 adults ages 30-44 are partners in same-sex unmarried couples, according to the 2009 American Community Survey, compared with 4.2 million who live with a partner of the opposite sex. Same-sex couples have distinctive patterns of income, education and household composition. They have higher median adjusted incomes ($99,204) than opposite-sex cohabiters ($54,179), married couples ($70,711) or adults without partners ($53,399). About half (48%) are college graduates, a notably higher share than for other adults. Less than a third (31%) live with children, a lower share than opposite-sex cohabiters.

To read more of the PEWresearch study, please visit here.