The Millennial Wealth Exodus: A Warning for High-Cost Cities
California Tops the List of States Losing Affluent Millennials
California saw the most significant departure of upwardly mobile millennial households in 2022, with **3,226 high-earning households leaving the state. These households, boasting an average adjusted gross income of $480,776, represent a significant financial and economic loss.
“This can have an outsized effect on local economies and politics, specifically housing, employment, and voting, among other important factors,” notes a recent study.
For every affluent household that departs, California loses valuable tax revenue—not just from current salaries but also from future earnings. This ripple effect on the state’s financial stability increased the tax burden on middle-class residents who needed to fulfill commitments such as public union contracts.
Other States Facing Similar Challenges
California isn’t alone in this trend. Several other states with high costs of living and heavy tax burdens also experienced significant losses for high-income millennial households:
– Illinois: Lost 1,323 households with an average income of $396,346.
– Massachusetts: Lost 1,102 households with an average income of $379,348.
– New York Lost 345 households with an average income of $457,137.
– Pennsylvania: Lost 320 households with an average income of $367,912.
These numbers are a wake-up call for states with rising housing costs and high taxes. Without changes to affordability, these regions risk losing more young, affluent residents, further straining their economies and tax systems.
Where Are Affluent Millennials Moving?
Most high-earning millennials are flocking to Florida and Texas, offering a significant financial incentive: no state income tax.
– Florida: Gained 1,786 millennial households with an average gross income of $526,273.
-Texas: Gained 1,660 millennial households with an average gross income of $405,215.
“High-earning households have the most to gain when it comes to minimizing income taxes,” notes the SmartAsset study.
These states are poised to benefit from the influx of wealthy young professionals who will continue to build their wealth and contribute to the local economy.
The Bigger Picture: What the High-Cost States Must Do
Cities in high-cost states risk creating a long-term economic challenge if they fail to address affordability issues. From soaring housing prices to burdensome taxes, these factors drive away young professionals critical for sustaining future growth.
Without intervention, the consequences could be severe:
– Economic Slowdown: A loss of wealth-building millennials means fewer high-income earners to contribute to local economies.
Increased Tax Burden: Middle-class residents will bear the brunt of higher taxes to fund state budgets.
Dwindling Workforce: Young professionals often drive innovation and entrepreneurship, leaving a gap in the labor market.
Cities must prioritize affordable housing initiatives, tax reforms, and economic incentives to retain and attract millennial professionals. Failure to act now could exacerbate the economic divide, leaving these states struggling to sustain their commitments and maintain growth.
As one of the most significant demographic groups continues to shift away from high-tax, high-cost areas, the message is clear: affordability isn’t just a benefit—it’s necessary for economic stability and growth.
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