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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

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.
    - mikeash 7y ago
      A 4% drop in average household size produces a 4% drop in median household income? That’s not a relatively big change, that’s a small change and exactly what I’d expect. Real per capita GDP rose by around 25% over this period. What accounts for the other 21%?
      - Consultant32452 7y ago
        The only point I'm making is that the median worker's wage has gone up, in spite of the charts showing the median worker's wage looks flat. We know it's gone up because we've discussed how it if all else were equal it SHOULD be down measurably due to things like there being more single families in the median household chart, adding a lot of lower wage workers through women's rights and immigration on the median worker wage chart. I'm not making any claims that the gains have been perfectly proportional across all segments of the population. Only that the average worker is really better off today than they were before, and that the median wage charts don't give us very helpful information to gauge how much better/worse off they are. These new additions to the labor pool don't just add another worker/job at the lower end affecting the median chart, they provide downward pressure on everyone's wages because they compete for those jobs. These workers are productive, so GDP goes up, but there is downward pressure on all wages. That is a big part of the story of the increasing wage/wealth disparity between the rich and everyone else. It's not the only factor, but it's a significant one.

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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?
- deleted 7y ago
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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.
  - mikeash 7y ago
    A 4% drop in average household size produces a 4% drop in median household income? That’s not a relatively big change, that’s a small change and exactly what I’d expect. Real per capita GDP rose by around 25% over this period. What accounts for the other 21%?
    - Consultant32452 7y ago
      The only point I'm making is that the median worker's wage has gone up, in spite of the charts showing the median worker's wage looks flat. We know it's gone up because we've discussed how it if all else were equal it SHOULD be down measurably due to things like there being more single families in the median household chart, adding a lot of lower wage workers through women's rights and immigration on the median worker wage chart. I'm not making any claims that the gains have been perfectly proportional across all segments of the population. Only that the average worker is really better off today than they were before, and that the median wage charts don't give us very helpful information to gauge how much better/worse off they are. These new additions to the labor pool don't just add another worker/job at the lower end affecting the median chart, they provide downward pressure on everyone's wages because they compete for those jobs. These workers are productive, so GDP goes up, but there is downward pressure on all wages. That is a big part of the story of the increasing wage/wealth disparity between the rich and everyone else. It's not the only factor, but it's a significant one.