Because of major demographic changes, movements in the median wage do not necessarily describe what happened to "typical" workers over a decade or more. The median was mathematically diluted by the addition of millions of low-wage immigrants. Adding so many more people at the bottom of the income ladder redefined the midpoint (median). Yet it probably had no effect on those previously considered "typical" (middle-income) except to hold down their cost of fast food or home and lawn care.
Any measure of wages alone understates increases in living standards by excluding health and retirement benefits. The BLS index of real compensation includes benefits. It rose to 118.7 in 2004 from 89.5 in 1980 -- a gain of 32.6 percent. Even total compensation excludes income from investments, including the statistically invisible returns inside IRA and 401(k) plans. All measures of earned income likewise exclude the underground cash economy, legal and illegal. And they exclude huge transfer payments, including the Earned Income Tax Credit and Social Security.
The broadest measure of living standards is what consumers spend. Real consumption per person rose from $14,816 in 1980 (in 2000 dollars) to $25,816 in 2004 -- an unprecedented gain of 74.2 percent. Can anyone really believe that all those new superstores, malls and restaurants built since 1980 have been catering to just the richest 10 percent? Can anyone believe the top 10 percent really bought nearly all of those new houses, cars, computers and steaks? The whole idea that the America has experienced a 25-year stagnation in typical living standards is as fanciful as the phony statistics deployed to defend it.
President Kennedy was right, "A rising tide lifts all boats." People still have to be willing to get in the boat and grab an oar. Those willing to work, learn and invest do much better inside an American boat during a rising tide than they would sitting in an egalitarian's leaking boat, or boatless and treading water in some Franco-Euro stagnant pond.