This is all based on your definition of inflation and nothing else. In the full report (http://www.urban.org/research/publication/growing-size-and-incomes-uppe

This is all based on your definition of inflation and nothing else. In the full report (http://www.urban.org/research/publication/growing-size-and-incomes-upper-middle-class/view/full_report http://www.urban.org/research/publication/growing-size-and-i...) we can see that in Figure 1, all ranks of income have increased their income since 1979 except those < 5%. At the median we have ~ 30% gain in income. This result is a product of the choice of an inflation measure called the "personal consumption expenditure". Here http://www.advisorperspectives.com/dshort/charts/census/household-income-median-annual-real-growth-with-4-deflators.gif http://www.advisorperspectives.com/dshort/charts/census/hous... you can see the difference between median income as adjusted by PCE or by the more traditional CPI. With the former, we see a median income gain of almost 36%, and with the latter a gain of only 7.5%. CPI adjustments also show that since 2000, median income has actually fallen by 9% (see here http://www.advisorperspectives.com/commentaries/images/household-income-monthly-median-growth-since-2000.gif http://www.advisorperspectives.com/commentaries/images/house...). In other words, this result means nothing unless we believe that PCE is a better measure of inflation than the CPI. What's the difference? As far as I can tell (I've never studied this before), CPI measures only out-of-pocket expenditures by households, whereas PCE measures services targeted towards individuals as well. Especially (from WP): "CPI measures only the out-of-pocket healthcare costs of households where PCE includes healthcare purchased on behalf of households by third parties, including employer-provided health insurance. In the United States, employer health insurance is a large component and accounts for much of the difference in weights." In other words, what's being measured here is not that America's "upper middle class is growing", what is ACTUALLY being measured here is the rampant growth in health care costs, which means that more and more of American's income is being lost to employer-provided healthcare. This would be fine if we believed that health care outcomes were actually improving at the rate that health care costs have been increasing (well ABOVE the rate of inflation), but this is not, in fact, a reasonable assumption. This is just saying, because you pay your doctor twice as much now as you did in 1979, you are better off, and are now 'upper middle class'.