A Coming Wedding Bubble?

Okay, maybe a bubble is a bit of an exaggeration. But a new paper (.pdf) from the Census Bureau indicates a huge spike in the number of unmarried partners living together over the past year. As hard times hit, people look for ways to save money, and one method is to move in with your partner. Another is to put off an expensive wedding until the recession is over. Could these two techniques be related?

The number of Americans unmarried but living with opposite-sex partners increased an incredible 13% in 2010, according to the Census Bureau. First, how can we be so sure that this increase is significant? Because here's some history:

wedding bubble cht1 rev.png

As you can see, the rise from 2009 to 2010 is unprecedented, even over the past few years.

So what's causing it? Obviously, the driver is economic difficulty. Here's a chart showing the percentage subset of these couples who are both employed over the past three years and also in the labor force:

wedding bubble cht2 rev.png

As you can see, this percentage has been steadily declining, as unemployment has climbed and remained high. But it's been elevated since 2009 -- why are we just starting to see cohabitation increasing in 2010? For a few reasons.

First, there's pure logistics. If some people had a rental commitment through some time in 2009, then 2010 was the first year when the population fully reflected this cohabitation trend. So even when the economy began to tank, they may have been stuck in their lease, which caused a lag of up to a year.

Second, the bad economy has likely caused more Americans to wait longer to get married, but use moving in together as an intermediate step that they might not have otherwise taken. After all, a wedding is often the most expensive thing some young couples will ever pay for without a loan involved like a car or house. Since now isn't a great time for many Americans to be incurring such an expense, engagements and weddings are put off. But a symbolic commitment can be made by moving in together, which also makes good economic sense at a time like now.

A pent up supply of put-off weddings would also fit with the lag shown above. Weddings already in the works in 2007 or 2008 would have still mostly taken place by 2009, since most engagements last several months to over a year. That would keep cohabitation growth low through that time, as shown. But if fewer Americans decided to marry in late 2008 through 2009, then fewer weddings would occur in 2010

If this hypothesis is right, then when the economy improves, we may see a boom in weddings. While some of these cohabitating couples might eventually break up, it's quite plausible that a fair portion would have married sooner if the economic situation was more favorable. Of course, a sudden surge of demand for wedding-related goods and services will increases prices beyond their already astronomical mark-ups. So anyone waiting may have to pay a premium if rushing to get married once the economic recovery speeds up.

Note: This post as been revised to reflect a mistake of crediting the Bureau of Labor Statistics as the source of the new paper, instead of the Census Bureau, where it's actually from. This has been corrected throughout the post.