Middle America looks remarkably different today than 20 years ago,
according to the latest Outlook on American Life report from
H&R Block (NYSE: HRB). Now in its third year, the report
garners insights from the 20 million Americans who filed their
taxes with H&R Block in 2023 to shed light on hardworking
middle-income Americans and the less visible forces shaping the
nation’s economy. This year’s research surfaced that there are, in
fact, two middle Americas, not one, comprised of two distinct
groups – Millennials and Baby Boomers. While these two middles
differ in many aspects of life, they intersect in some unlikely
areas.
Analyzing insights from anonymized tax return
data, the 2023 Outlook on American Life report focuses in on the
4.6 million, or 44%, of middle-income Americans who reported an
adjusted gross income (AGI) between $45,000 and $145,000. In
addition to the tax return data, H&R Block commissioned a
general population survey of 1,007 taxpayers over 18 years old, 40%
of whom were Millennials (ages 25-44) and 42% were Boomers (55+).
By looking at almost a billion data points from this subset since
2000, the report paints a picture of not only who these hardworking
Americans are today but also how these taxpayers have changed over
time, including their feelings towards income, changes in marriage
and retirement ages, where they are most likely to live, and
more.
“Each year, H&R Block assists 20 million
American households in filing their tax returns, many of whom fall
into what most consider middle income. This makes us uniquely
positioned to paint a portrait of Americans,” said Kathy Pickering,
Chief Tax Officer, H&R Block. “Understanding their attitudes
and decisions that impact their financial status is important
because middle Americans can move the economic needle in either
direction very quickly.”
No Longer Married This year’s
report shows Middle America is shying away from walking, running,
or jogging down the aisle, with only 43% of Millennials and 50% of
Boomers in the Middle American income bracket filing jointly in
2023. That’s significantly lower than a generation ago. In 2000,
73% of Middle Americans between the ages of 25 and 44 and 70% of
those over 55 filed jointly.
While these trends conform to national data
showing Millennials marrying later, if at all, and married Boomers
divorcing before retiring, the drop was prominent. Compared to 20
years ago, filers between the ages of 25 and 44 are 105%, and those
ages 55 and over are 79%, more likely to file single than those at
the same ages 20 years ago. This can be attributed to the growth in
income and financial independence the two groups have achieved in
the past 20 years.
Income Isn’t Keeping PaceAmong
the filers in the household income range of $45,000 - $145,000, the
report found the majority to be making under $80,000. This year’s
report also sheds more light on how these hardworking Americans
feel about their income growth.
While income growth for Millennials seemed
promising, with 42% saying they are better off this year than last
and 58%—more than any other generation—saying their income has
increased over the previous few years, only half (53%) are
satisfied with the pace of their gains.
Conversely, 65% of Boomers are flat-out
dissatisfied with their income growth, with 42% saying they are
worse off this year than last. 38% of Boomers believe their
financial situation will remain the same, while 28% think it will
worsen, leading to pushing off retirement.
Working Harder Than Ever The
report also shows the vast majority of Millennials work full-time
and, on average, two jobs to keep up with inflation and augment
their income, with nearly one in three intending to work for an
app-based company.
Ambition and entrepreneurship are also major
driving forces for them, as one of every four Millennials plans to
start a business within the next year, and 43% intend to acquire a
new skill. Millennials are also the group most likely to rent out
their home or part of it to earn some extra cash.
“Side hustles and alternative ways of earning a
living remain on the rise, particularly among Millennials, with
most reporting it is to keep up with rising inflation rates,” said
Pickering. “This has other implications, though, such as more
complicated tax returns. We find that these taxpayers need more
guidance and assistance to navigate these unique tax
situations.”
A Shift to The Coast In
addition to growing changes in income and lifestyle, Middle America
has also undertaken significant geographical moves. In 2020,
rolling lockdowns and persistent uncertainty dampened state
migration rates across all age groups. But as travel resumed,
migration rebounded. In 2021, Millennials were 7% more willing to
change states than before the pandemic, and Boomers 14%.
What may be surprising is where Middle Americans
wound up. The report indicates that many Middle Americans leave
large cities and colder states for less congested areas and warmer
climates. By volume, the top five destinations for migrating
Millennials in 2022 were Texas, Florida, California, North
Carolina, and Virginia. The top five for Boomers included Florida,
Texas, Arizona, North Carolina, and South Carolina.
For more information and insights on Outlook on
American Life, please visit OutlookonAmericanLife.com.
About H&R BlockH&R Block, Inc. (NYSE:
HRB) provides help and inspires confidence in its clients and
communities everywhere through global tax preparation services,
financial products, and small-business solutions. The company
blends digital innovation with human expertise and care as it helps
people get the best outcome at tax time and also be better with
money using its mobile banking app, Spruce. Through Block Advisors
and Wave, the company helps small-business owners thrive with
year-round bookkeeping, payroll, advisory, and payment processing
solutions. For more information, visit H&R Block News.
For Further Information
Media Relations: |
Teri Daley, (816) 854-3787, teri.daley@hrblock.com Heather Woodard,
(660) 864-3836, heather.woodard@hrblock.com |
|
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Investor Relations: |
Michaella Gallina, (816)
854-3022, michaella.gallina@hrblock.comJordyn Eskijian, (816)
854-5674, jordyn.eskijian@hrblock.com |
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