Even though there are claims that household income is stagnant, or that the average worker's income has not increased (popular meme in the press), as you have observed, the averages have increased, and there is a difference between household and per-capita income. These numbers are reported as averages, combining those who derive the bulk of their income from investments with those who work. It might be more accurate to only consider those who work, and determine their average income for hours worked (also reported average wage per hour and hours worked)? The income numbers, and the inflation numbers are all attempts to measure how the population is doing, and are therefore very political.
Another aspect worth some attention would be to consider the entire income statement. Note that when you look at an income statement, you want to look at and consider both sides, income and expenses. And when you look at the expense side of any household or per-capita budget, you will see some areas that are much better, and some that are worse. And it is also worth considering the value received for the money being spent, and how that has changed over the past 20-30 years. Certainly, our expenses and our lifestyle have changed, as we have shifted our wants and needs.
Consider the changes since 1984 or 1990. Few of us had cellphones, nobody had gps, the internet, smartphones, LCD or LED TV's, Dvd and Blueray did not exist, nor did most of us have email, on-demand movies and tv shows did not exist, nor did we have life-like video games. Consider the cars made in 1984 (Chevy Citation? Ford Tempo?)
Consider our expenses,
- Homes - compare a home built in 1990 to a home built in 1950. Better materials, plumbing, insulation, electrical, vast improvements, higher prices, price collapse, net win (most areas).
- Rent - prices have remained affordable (most areas).
- Cars - competition has produced better, faster, safer cars. Prices are higher, but quality, value, mpg are better, and cars last twice (200K+ miles) as long as 30 years ago, net win.
- Heating - better insulation, smart thermostats, higher rates, net loss.
- Electricity - CFL and LED bulbs, efficient appliances, higher rates, net win.
- Grocery - price increases less than inflation rate, net win.
- Gasoline - better mpg (50%), prices higher (250%) over past 20-30 years, net loss.
- Clothes - competition has reduced prices, win!
- Internet - replacing cable, better freedom/choice, on demand, win!
- Cellphone - replacing landline, smartphones adding value, win!
- Video games - amazing increase in value in the past 10 years, win!
- Netflix, Hulu, Email, Google, Facebook, etc - win!
- TV - 40-50 inch LED TV for under $500, huge win!
- Dvd and Blueray - quality 3x better than Vhs, win!
What are the big budget busters?
- Medical - dramatic increases in costs, huge loss!
- College - large increases in costs, huge loss!
- Rent/Housing prices much higher in LA, SF, NYC, CHI, etc.
- Taxes - increased as percent of income for most, loss!
Note that medical care has improved dramatically over the past 30 years, as has our understanding of nutrition, fitness, and health. People live longer, especially when they avoid deleterious behaviors (smoking, drinking, hazardous chemicals, dangerous activities, etc), and pursue healthly lifestyles. Medical costs can be mitigated by choices.
College costs are also a choice, and many people are questioning the value proposition of expensive schools and degree programs. Alternatives such as online learning, massive online courses are available. But the traditional college experience remains the norm, and will remain expensive.
The increased costs for Rent/Housing in certain expensive areas can be avoided by choice (live somewhere cheaper). And for those with budget challenges, or fixed incomes, these choices can greatly improve the expense situation. This approach can also be applied to Taxes, at least at the state level, as Taxes vary by state (income, sales, and property taxes). There are seven states with no income tax. And one reason that NYC has such high rents is the higher property tax for rental properties.