The U.S. States Attracting the Most Wealthy Millennials [2023 Data Study]

The millennial generation — those currently aged 27 to 42 — is America’s largest,¹ and as they move solidly into their peak earning and spending years, they are quickly asserting their economic power.

Millennials faced a tough economic outlook in their early working years. The impacts of the Great Recession, unprecedented levels of student loan debt, and stagnant wage growth made it difficult² to find good jobs and build wealth. But over time, the outlook has improved. Millennials are now the largest segment of the labor force.³ Within the last few years, they have also become the largest share of homebuyers.⁴ And other unique characteristics of the generation⁵ — like higher educational attainment levels, especially for women — also contribute to economic advancement.

The COVID-19 economy also created some new opportunities for the millennial generation. Tightness in the labor market for much of the pandemic allowed many workers to change jobs in the last few years — sometimes multiple times — in search of higher wages or better working conditions. A wave of early retirements among older workers during the pandemic opened up opportunities for younger workers to move into higher-earning roles. And after working remotely during the pandemic, many workers have since successfully pushed for permanent work-from-home or other flexible arrangements that give them more control over where they work.

Because of these trends, the U.S. experienced a sharp rise in the rate of people moving across state lines from densely populated and expensive states to those offering some combination of more affordable housing, space for home offices, lower taxes, and better recreational opportunities. Such moves were common among wealthy millennials.

Out-of-State Migration Over Time

Out-of-state migration is rising after reaching historic lows. Image Credit: Upgraded Points

While out-of-state migration as a percentage of the total population remains near historic lows, out-of-state migration as a percentage of those who moved has increased significantly in recent years.

In 2000, nearly 1 in 5 people who have moved left 1 state for another. This rate fell off sharply as the housing bubble burst and the Great Recession set in, making it harder for people to find economic opportunities that justified an interstate move.

The out-of-state migration rate fell to a low of 11.5% in 2010 but began to move upward as the economy recovered in the following decade. But in the wake of the COVID-19 pandemic, out-of-state migration has risen sharply, jumping from 14.2% in 2020 to 17.3% in 2022.

Characteristics of Out-of-State Movers

Younger and lower-income Americans were more likely to move out of state. Image Credit: Upgraded Points

Typically, however, rates of migration are higher during workers’ younger years. Workers have fewer major family or financial obligations at this stage of life, which allows them to be more mobile in pursuing job opportunities.

According to individual tax return statistics from the IRS, nearly 6% of those under age 25 moved out of state between 2020 and 2021, as did 4.5% of those aged 26 to 34 and 2.7% of those aged 35 to 44. In contrast, fewer than 2% of those in the 45+ age cohort migrated out of state.

Income was also a factor: lower earners moved between states at higher rates, with 3.7% of those earning $10,000 or less doing so. The highest earners — those making more than $200,000 — also moved at a slightly higher rate than most middle-income workers.

Where Are Wealthy Millennials Moving?

While Florida and Texas gained the most wealthy millennials, Vermont saw the largest percentage gain. Image Credit: Upgraded Points

Between COVID-19-related changes in the labor market and the preexisting tendency of younger and highest-earning workers to be mobile, millennials in the top income brackets have frequently been on the move. 

In total numbers, Florida and Texas have been the greatest beneficiaries, each adding more than 15,000 millennials who earned more than $200,000 in 2021. California and New York — where the high cost of living, especially for housing, is a persistent challenge — fared worst, losing around 31,000 and 27,000 wealthy millennials, respectively. 

On a percentage basis, however, states in New England, the Mountain West, and the Southeast added wealthy millennials the fastest. Vermont (+8.5%) and Maine (+5.5%) led in New England, Idaho (+7.4%) and Montana (+6.7%) in the Mountain West, and Florida (+5.6%) and Tennessee (+4.5%) in the Southeast.

For a breakdown of all 50 U.S. states, here is the report’s complete data table:

Methodology

To determine the states attracting the most wealthy millennials, researchers at Upgraded Points analyzed the latest data from the IRS Statistics of Income Division’s 2021 U.S. Population Migration Data.

The researchers ranked locations according to the net inbound migration of wealthy millennials as a percentage of wealthy millennial residents the year prior. For the purposes of this analysis, net gain or loss of wealthy millennials was defined as the difference between those millennials who moved into and those millennials who moved out of a given state based on individual tax return data spanning 2 years.

Additionally, wealthy millennials were defined as those ages 26 to 45 in the year 2021 who reported earning over $200,000 on their 2021 federal income tax returns. In the event of a tie, the location with the larger net inbound migration of wealthy millennials was ranked higher.

Final Thoughts

The millennial generation, aged 27 to 42, is becoming a dominant force in America’s economy as they enter their peak earning and spending years. Despite facing economic challenges early in their careers, including the Great Recession and high student loan debt, their economic outlook has improved. They now make up the largest share of the labor force and homebuyers, with higher educational attainment levels contributing to their economic advancement, especially among women.

The COVID-19 pandemic has created new opportunities for millennials. A tight labor market allowed many to change jobs for better wages and conditions, and early retirements among older workers opened up higher-earning roles. Remote work also provided flexibility, leading to an increase in interstate migration, rising from 14.2% in 2020 to 17.3% in 2022. Younger workers were more mobile, with 6% under 25 and 4.5% aged 26 to 34 migrating between states. Income also played a role, with lower and higher earners being more mobile than middle-income workers.

In terms of migration patterns, Florida and Texas gained the most high-earning millennials, while California and New York saw significant losses in part due to high living costs. States in New England, the Mountain West, and the Southeast saw the largest percentage changes in wealthy millennial populations resulting from interstate migration, with Vermont, Maine, Idaho, Montana, Florida, and Tennessee leading the way on a percentage basis.

References

1. Pew Research Center. (2020, April 28). Millennials overtake Baby Boomers as America’s largest generation. https://www.pewresearch.org/short-reads/2020/04/28/millennials-overtake-baby-boomers-as-americas-largest-generation/. Retrieved September 19, 2023.
2. Federal Reserve Bank of St. Louis. (2021, March 29). Millennials Are Catching Up in Terms of Generational Wealth. https://www.stlouisfed.org/on-the-economy/2021/march/millennials-catching-up-earlier-generational-wealth. Retrieved September 21, 2023.
3. Pew Research Center. (2018, April 11). Millennials are the largest generation in the U.S. labor force. https://www.pewresearch.org/short-reads/2018/04/11/millennials-largest-generation-us-labor-force/. Retrieved on September 21, 2023.
4. National Association of Realtors. (2023). Home Buyers and Sellers Generational Trends Report. https://www.nar.realtor/sites/default/files/documents/2023-home-buyers-and-sellers-generational-trends-report-03-28-2023.pdf. Retrieved September 21, 2023.
5. Pew Research Center. (2019, February 14). Millennial life: How young adulthood today compares with prior generations. https://www.pewresearch.org/social-trends/2019/02/14/millennial-life-how-young-adulthood-today-compares-with-prior-generations-2/. Retrieved September 21, 2023.