Here is the crux. We're making plenty of money. We're just reporting less of it to you schmucks at the IRS!
Here is my take from someone out in the trenches.
I specialize in employee benefits especially short and long term disability for groups. For most of the groups I have income levels have stayed the same or have decreased. Why have they decreased? One reason is health insurance is now on average $750-900 per month and employers are paying less so the employees have more taken out of their pay resulting in less income.
I have also seen many groups lower the pay for new employees or cut back on overtime. A friend of mine makes on average about 60K per year with overtime. The company he works for has banned overtime for the last 2 years so his pay has dropped to around 48-52K.
Trust me as someone who sees what employees are making the pay is not going up.