From Russ Roberts at Cafe Hayek:
The Fishtown folk at the top of the graph have never attended college. The Belmont people at the bottom have at least a bachelor’s degree. On average, the Fishtown folk are poor. The Belmont folk are much richer.
If the poorest people have the highest divorce rates, the increase in households in the 1980′s and beyond are going to come from the poorest people, adding numbers of households below the median and pulling the measured median down as a pure statistical artifact. That fall in median household income tells you nothing about the health of the economic system. It’s telling you something about the health of American marriages. (The increase in college attendance over this time period softens the magnitude of the impact, btw. But it doesn’t change it.)