Median HH Income is Stagnant, but NOT for the Reasons You've Been Told

Mark Perry  at U of Michigan created this very interesting chart. Yes, median household income has not been growing for the last 15 years. You've heard that. But real hourly compensation has been growing steadily. Mathematically this can only happen if the median number of hours worked per household fell. There are several possibilities which would contribute to this:

1. Employed people are working fewer hours. We know that Obamacare caused many jobs to become part-time rather than full time. People may also be voluntarily reducing

2. There are fewer people employed per household. We know that household size has been steadily decreasing for some time. If a working couple divorces, the number of hours worked per household (now 2 instead of 1) drops as does the medium income per household.

3. The percent of the workforce that is employed continues to drop year after year. That results in fewer hours worked per household.

The bottom line is that when the media and politicians shout that the "median household income is falling" it is not because people are being paid less to work. There is just a lot less work being done in the average household.