A bunch of standard measures of US economic wellbeing (median household income, real wages for workers with high school education, educational attainment by age 25 and so on) show strong improvement from 1945 to the early 1970s, followed by stagnation or very slow growth thereafter. A variety of arguments, have been put forward to suggest that the standard statistical measures understate improvements in wages, incomes and so on since the 1970s. Some of these arguments are valid (for example household size has fallen), some not (for example, the fact that we now have more of goods that have become relatively cheaper). Regardless of validity, the main reason people believe these arguments is that, for anyone who was around at the time, it seems implausible that our parents’ living standards in the 1970s were comparable to our own today (assuming roughly similar class positions)
This reasoning is invalid for a reason that should be familiar to those on the conservative side of debates over inequality. The measures mentioned above compare snapshots of incomes at different times. But (as conservatives regularly point out) standards of living are determined mainly by lifetime incomes, not by income in any particular year. Given the pattern described above, lifetime income for someone who worked, say, from 1940 to 1985 was well below that for someone in a similar class position who started work in 1970, just when the long increase in real wages was slowing for most and stopping for some. For every year of their working life, the 1970 starter gets a wage (adjusted for age, education and so on) that’s as high as the maximum attained by the 1940 starter after 30 years of steady growth. Unsurprisingly, that translates into a bigger house, and more of most items that require savings, whether or not their price has risen relative to the CPI.
You can see a similar effect illustrated for education here. Although the proportion of young people completing high school or gaining bachelors degrees reached a plateau in the 1970s, the proportion of the entire population with these qualifications kept on growing into the early 2000s
The two work together. Real wages for high school educated males haven’t risen since 1970, on the standard measures, but a man born in 1950 would not only earn more lifetime income than his father, assuming both had high school education, but would be much more likely to have gained a college degree. By contrast, a man born in 1980 is no more likely than his father to have completed college**, and, assuming high school education, would have similar lifetime earnings.
* Australians of the right cohort will recognise the allusion, otherwise Google should work
** I haven’t checked college completion by gender. I’d guess that if rates are stable overall, those for men must have fallen.