Question
In many areas of the U.S. median family income is much higher than median household income. Why?
Answer
It is a consequence of the definitions of family and household. The U.S. Census Bureau writes (citation):
A family consists of two or more people (one of whom is the householder) related by birth, marriage, or adoption residing in the same housing unit. A household consists of all people who occupy a housing unit regardless of relationship. A household may consist of a person living alone or multiple unrelated individuals or families living together.
Median family income is typically higher than median household income because of the composition of households. Family households tend to have more people, and more of those members are in their prime earning years; as contrasted with members who have lesser incomes because they are very young or elderly.
Areas with a wide disparity between the two measures have an excess of nonfamily households: single persons or otherwise. (The CPS excludes young adults in group quarters, and counts college students in dormitories as living in the parental home.)
The drawback to using family income measures is that they disregard persons living in nonfamily households, who tend to be disproportionately young or old.
Conversely, in some situations it is appropriate to exclude nonfamily households: for example, housing affordability. It is based on family income rather than household income, because nonfamily households are not typically buyers.
References
Related Releases
Median Family Income - State, Metropolitan Area and County (Quarterly)
Median Household Income - State, Metro and County (Quarterly)
Selected CPS tables on Household and Household Income