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Unfortunately, median household income has barely budged in the last twenty years.

Consultant32452 7y ago
Let's work with some simple numbers and think about what's happened in history. Imagine median worker income in the 1970s was $100. For a lot of women, they weren't allowed to be workers. Let's increase the population of "workers" by 20% (adding those women), but only pay those women $70 (because patriarchy). What's the median income now? $95. Let's increase the number of "workers" by another 20% by bringing in 30 million immigrants and their descendants. Those immigrants were making $5 in their old country, but they aren't represented in that original $100 median worker salary. But now they're making $60. Better than they were, but worse than white men because racism. What's the median income now? $89. This is the real story behind all the drama about median wage stagnation, median household income, etc. We added a bunch of lower wage people into the calculation. Those people are better off than they were before, but they drag down the one stat we look at with tunnel vision. That doesn't mean I deny any of the real concerns people have about racism/sexism/etc. But everything can literally be better for everyone, and as I demonstrated above we can still decrease the median household income. When you say something like "median household income has barely budged in the last twenty years" that's a very shallow assessment. What's happened to the labor market? What's happened to the housing market? Are there more single people as a percentage of the population? Should we expect single households to have the same income as married households? What has been the historical household income for single moms? Are there more single moms today than 20 years ago? How does that impact median household income?
- mikeash 7y ago
  Average household size hasn’t changed much in the past 20 years. It’s down by about 4% in that time, so that doesn’t explain it. The percentage of the workforce that consists of women is also pretty much flat over that period, and in any case if we’re talking about households and household size hasn’t changed significantly then more women working would increase, not decrease, the median even if they’re underpaid. Is it all down to underpaid immigrants, then?
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  - Consultant32452 7y ago
    Solo households, as a percentage, has significantly increased from 17% in 1970 to 28%. https://articles.ezlandlordforms.com/landlord-and-real-estate-news/the-rise-of-solo-households-and-the-implications-for-real-estate-investors/ https://articles.ezlandlordforms.com/landlord-and-real-estat... That should, on average, cut the household income of those houses in half compared to if two of those singles were married and/or living together. I don't know what the data is for just the last 20 years, but taking a small fraction of the households and splitting them up into two households each making half as much puts a big dent in median once you run the math.
    - mikeash 7y ago
      Average household size went from 2.6 in 1999 to 2.5 today. How is that going to put a big dent in the median?
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      - Consultant32452 7y ago
        Sure, let's make some assumptions to show how the math works out. Let's assume a total population of 10k, every household is a married couple. Each parent is a worker making $50, resulting in every household (two workers) income being our same $100 median. For a household size of 2.6, we wind up with 3,846 households. If there's 3,846 households with a median income of $100, that makes our total economy $384,600. Now let's assume enough of those families divorce such that there are now only 2.5 people per household. We wind up with 4,000 households. We still have the same total economy of $384,600 but split across more households (4000) that results in a median household income of $96. That's a 4% drop in median income. Now of course in real life the change in household size isn't just people getting divorced (or never marrying). It's also reduce birth rate. But I hope you can see how a small change in single people makes a relatively big change in median income.

Let's work with some simple numbers and think about what's happened in history. Imagine median worker income in the 1970s was $100. For a lot of women, they weren't allowed to be workers. Let's increase the population of "workers" by 20% (adding those women), but only pay those women $70 (because patriarchy). What's the median income now? $95. Let's increase the number of "workers" by another 20% by bringing in 30 million immigrants and their descendants. Those immigrants were making $5 in their old country, but they aren't represented in that original $100 median worker salary. But now they're making $60. Better than they were, but worse than white men because racism. What's the median income now? $89. This is the real story behind all the drama about median wage stagnation, median household income, etc. We added a bunch of lower wage people into the calculation. Those people are better off than they were before, but they drag down the one stat we look at with tunnel vision. That doesn't mean I deny any of the real concerns people have about racism/sexism/etc. But everything can literally be better for everyone, and as I demonstrated above we can still decrease the median household income. When you say something like "median household income has barely budged in the last twenty years" that's a very shallow assessment. What's happened to the labor market? What's happened to the housing market? Are there more single people as a percentage of the population? Should we expect single households to have the same income as married households? What has been the historical household income for single moms? Are there more single moms today than 20 years ago? How does that impact median household income?

mikeash 7y ago
Average household size hasn’t changed much in the past 20 years. It’s down by about 4% in that time, so that doesn’t explain it. The percentage of the workforce that consists of women is also pretty much flat over that period, and in any case if we’re talking about households and household size hasn’t changed significantly then more women working would increase, not decrease, the median even if they’re underpaid. Is it all down to underpaid immigrants, then?
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- Consultant32452 7y ago
  Solo households, as a percentage, has significantly increased from 17% in 1970 to 28%. https://articles.ezlandlordforms.com/landlord-and-real-estate-news/the-rise-of-solo-households-and-the-implications-for-real-estate-investors/ https://articles.ezlandlordforms.com/landlord-and-real-estat... That should, on average, cut the household income of those houses in half compared to if two of those singles were married and/or living together. I don't know what the data is for just the last 20 years, but taking a small fraction of the households and splitting them up into two households each making half as much puts a big dent in median once you run the math.
  - mikeash 7y ago
    Average household size went from 2.6 in 1999 to 2.5 today. How is that going to put a big dent in the median?
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    - Consultant32452 7y ago
      Sure, let's make some assumptions to show how the math works out. Let's assume a total population of 10k, every household is a married couple. Each parent is a worker making $50, resulting in every household (two workers) income being our same $100 median. For a household size of 2.6, we wind up with 3,846 households. If there's 3,846 households with a median income of $100, that makes our total economy $384,600. Now let's assume enough of those families divorce such that there are now only 2.5 people per household. We wind up with 4,000 households. We still have the same total economy of $384,600 but split across more households (4000) that results in a median household income of $96. That's a 4% drop in median income. Now of course in real life the change in household size isn't just people getting divorced (or never marrying). It's also reduce birth rate. But I hope you can see how a small change in single people makes a relatively big change in median income.