As the current expansion has gained strength, the pace of income gains has increased. This factor contributes to increased dispersion in the income distribution. Figure 2 shows that, with a corrected CPI, every fifth of the income distribution has had a modest gain in average income. Percentage gains for families in the highest income fifth, however, were about double the gains for all other fifths of the distribution. Recent research by Leonard Nakamura, economist with the Federal Reserve Bank of Philadelphia suggests that official data have understated real income growth for a much longer period.
Official data suggest that income growth was much slower in the second period.
But Nakamura finds just the opposite. In fact, Nakamura's work suggests that per capita real income grew by nearly 3.7 percent per year in the 1974-1994 period, roughly double the officially reported rate. Using an income range from 60 to 140 percent of the median, adjusted for family size, to define middle class, DOL found a decline in the share of Americans in middle class families between 1969 and 1993. However, most of the decline was due to growth in the share of individuals in upper income families.