The American middle class hasn't got a raise in 15 years. Median household incomes aren't moving.
Canadian numbers tell a similar story. The market income (earnings, private pensions, investment income) of the median Canadian household is lower now, in real terms, than it was in 1976:
But what happens if we break apart that median household, and see how various types of families are faring? To make the comparisons easier, I've normalized so that 1976=100 for all family types.
Every type of couple family has done better than the typical family, with married "elderly" (Statistics Canada's term for the 65 and over) couples experiencing spectacular gains in market incomes.
The next diagram shows trends in median market incomes for various uncoupled demographics. Elderly singles are enjoying four times the market incomes their counterparts received in 1976. (Note that this is before factoring in Canada and Quebec Pensions and Old Age Security). Another group that has done well is single moms: the market income of the median female lone parent has almost doubled, real terms, since 1976. Yes, the income of unattached women under 65 has decreased in constant dollars - but by basically the same amount as the median incomes of all household units have decreased. Only one major demographic - unattached non-elderly men - has seen their median income fall by more than that of the "typical" household. Even there, the difference is not large - median incomes, overall, have fallen 7 percent in real terms since 1976; median incomes of single non-elderly men have fallen 10 percent.
But it's a puzzle: how can the median incomes of just about every demographic rise by more than overall median incomes? Shouldn't we expect to see a number of groups doing less well than the population average?
Actually, no. The next diagram shows the evolution of median incomes for all household types, in constant 2011 dollars:
As Canada's population ages, there are more and more elderly households. Yes, market incomes have grown among the elderly - but that growth is on a very small base. The elderly still have much lower market incomes than those under 65. There are also relatively more singles and relatively fewer families with children now than there once were - in 2011, for the first time, there were more one-person households than there were couples with children - and singles, on average, have lower incomes than families with children. In 1976, couples with children outnumbered couples without; in 2006, that changed, and couples without children became the majority - yet couples with children earn, on average, more than those without.
Household incomes in Canada have stagnated in part because - whether by choice or the force or circumstance - people are living in smaller households, and fewer potential earners means lower incomes.
Yet the fact that people move between demographic groups means that one has to be very careful with claims that one group or another is experiencing rapid income growth (or conversely, falling incomes). Someone who was 76 in 1976 came of age during the first world war, then lived through the depression and the second world war. When would he or she have had an opportunity to set aside money for retirement? Someone who was 76 in 2011, on the other hand, would have been born in 1935, hit the labour market in the 1950s, might have bought into Vancouver or Toronto real estate in the 1950s or 1960s, seen their mortgage debt erased by the inflation of the 70s and 80s, invested during the stock market boom of the 1990s... The rapid growth in the median income of the elderly doesn't necessarily translate into income growth for any given elderly person. It might simply reflects people who had relatively poor lifetime income and investment opportunities being replaced by people who had relatively good lifetime income and investment opportunities. The same goes for every other demographic.
I'm not the first to observe that changing demographics can account for part of the trends in median household income - this issue has discussed on Tyler Cowen's blog, and Ben Casselman takes apart the trends here.
It's easy just to focus on a single number, and track that number over time. But to really understand what's going on, one needs to take a cohort approach - think of the population as a whole collection of people of different ages, and think about what is happening to each one of those cohorts as they age over time. Yet this is an order of magnitude more difficult than tracking a single number over time, because it involves thinking in three dimensions, not two.
The truth is out there. Unfortunately, it's complicated.