Russell is right that absolute standards of living matter. But I think that he failed to address Boushey’s point (which is fairly widely accepted by economists) that relative success matters to people, too. Understanding the causes and consequences of rising inequality is therefore important, and can not simply be glossed over by arguing that the poor are better off than they used to be.
Table A-1 from the 2004 Census report on Income, Poverty, and Health Insurance Coverage in the United States shows that both median and mean real household income may have been higher in 2004 than in 1984, but the data also show that median income has declined since 1999. In addition to having a lower median income in 2004 than was observed in 1999, a greater percentage of households have incomes level below $25,000 per year. The poor may be better off today than they were a generation ago but they are not better off than they were even five years ago.