5 ms·

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
[deleted]
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.
    - mikeash 7y ago
      I said it has "barely budged". A few percent in two decades fits that description. I don't understand why you bring up women entering the workforce again. As I mentioned, that's wrong twice: the proportion of women in the workforce is flat over this timeframe, and additional women in the workforce would push median household income up, not down. So we're left with immigrants. Thus my original question way up there: is it all down to underpaid immigrants, then?
      - Consultant32452 7y ago
        I'm not sure I can help you. My point is that you seem to be trying to make a political statement based on a single variable in an extremely complex system that is multivariate. As I demonstrated, it's trivially easy for everyone in the system to make more money but for the median household income and/or median wage to go down. But all of my numbers are completely fake. I don't know what the real numbers are or their impacts. And those are just the kinds of things I thought of off the top of my head. I can neither prove or disprove the thing you seem to be alluding to. I'm inclined to agree with what I'm assuming is your intent, but the data available doesn't actually tell that story. Nor does it disprove that story.
        mikeash 7y ago
        And yet when we considered the variables you mentioned, the conclusion didn’t change. What is the point of mentioning that decreasing household size could make the number misleading, when household size didn’t decrease by a significant amount? What is the point of repeatedly bringing up workforce participation by women? It’s fine to say that a measure might be misleading because of other factors. But when those factors don’t actually make it misleading for the example being discussed, I don’t really get the point. It’s also weird that you focus entirely on the possibility that everyone is better off. Isn’t it also possible that everyone is worse off while the median household income remains flat? Smells of ideological bias.

deleted 7y ago

[deleted]

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.
  - mikeash 7y ago
    I said it has "barely budged". A few percent in two decades fits that description. I don't understand why you bring up women entering the workforce again. As I mentioned, that's wrong twice: the proportion of women in the workforce is flat over this timeframe, and additional women in the workforce would push median household income up, not down. So we're left with immigrants. Thus my original question way up there: is it all down to underpaid immigrants, then?
    - Consultant32452 7y ago
      I'm not sure I can help you. My point is that you seem to be trying to make a political statement based on a single variable in an extremely complex system that is multivariate. As I demonstrated, it's trivially easy for everyone in the system to make more money but for the median household income and/or median wage to go down. But all of my numbers are completely fake. I don't know what the real numbers are or their impacts. And those are just the kinds of things I thought of off the top of my head. I can neither prove or disprove the thing you seem to be alluding to. I'm inclined to agree with what I'm assuming is your intent, but the data available doesn't actually tell that story. Nor does it disprove that story.
      - mikeash 7y ago
        And yet when we considered the variables you mentioned, the conclusion didn’t change. What is the point of mentioning that decreasing household size could make the number misleading, when household size didn’t decrease by a significant amount? What is the point of repeatedly bringing up workforce participation by women? It’s fine to say that a measure might be misleading because of other factors. But when those factors don’t actually make it misleading for the example being discussed, I don’t really get the point. It’s also weird that you focus entirely on the possibility that everyone is better off. Isn’t it also possible that everyone is worse off while the median household income remains flat? Smells of ideological bias.