Easterbrook makes some very important points:
Stated in today’s dollars, median household income was $45,000 in 1985, peaked at $52,500 in 2000 and is $50,000 now. (Absurd precision such as the “$46,269” median for 1991 doesn’t appeal to me.) Nearly all the decline from $52,500 to $50,000 has occurred since 2007 that is, during a recession. Most likely that loss will bounce back.
But the key point is that the numbers in the Census Bureau report, and in nearly all alarmism about the middle class, are pre-tax income. Federal income tax rates for the middle class were cut in 2001 and again in 2003. ... The result is that slightly lower middle-class incomes are being taxed less and all that matters to the individual is buying power.
His bottom line:
After-tax and adjusting for consumer prices, middle class household income is about the same today as a decade ago. That’s not fabulous but it’s also not the emergency being claimed.