From http://www.federalreserve.gov/... ...

Moreover, real earnings of the average worker have continued to rise.
...
The reason for this positive long-run trend in living standards appears to be that more fundamental economic forces are determining real incomes...the state of knowledge and skill of a population; the degree of control over indigenous natural resources; the quality of a country's legal system, particularly a strong commitment to a rule of law and protection of property rights; and yes, the extent of a country's openness to trade with the rest of the world.

Let's enumerate these again for emphasis, then tackle each one to see how we're doing:
1. the state of knowledge and skill of a population
2. the degree of control over indigenous natural resources
3. the quality of a country's legal system, particularly:
   a. a strong commitment to a rule of law and
   b. protection of property rights
4. the extent of a country's openness to trade with the rest of the world

First, I dispute the initial claim. I believe the author is correct in saying the standard of living steadily increased (with the exceptions already noted) but only through the 80s. After that, the standard began to fall. When I compare the income in my specialty now to the income of someone in my same industry and level of experience in the 80s, adjusted for inflation (i.e., cost of living), it's off by nearly a factor of two. This means the standard of living has halved in the last quarter century. When you see all the double-income families, far less popular 25 years ago, you begin to see my point here. I won't tarry on this point here, but this drop in real income in the last quarter century is easily understood in light of the following points.

Point 1's knowledge and skill--necessary for a prosperous nation--are in short supply today. U.S. math scores continue to decline. Reading comprehension, even among college graduates, is abysmal. Simple problem solving is no longer so simple for most folks. Following basic instructions is a thing of the past. I'm sure we have countless anecdotes of our own to back these claims, but test scores prove them, too. Like never before, public education is working overtime to turn the next generation into total morons. In my own field of industrial expertise (engineering), self-named professionals are woefully undereducated (despite averaging more degrees than 25 years ago) and generally struggle with problems easily solved a generation ago. It's frustrating working with them these days--worse that they're not even embarrassed by their own ignorance and incompetence. (Not to mention what these morons have done to the average income of my once gifted profession.)

Point 2 speaks of control over natural resources. Quite the opposite is true now. Were we to find a valuable natural resource on our private property, rest assured it would be immediately annexed by the State "for the greater good". Most any resource worth anything is already under State control. In fact, here in GA, if you find something of note using a metal detector on public land (e.g., the beach), by law you must surrender it to the state.

Point 3, the quality of our legal system. Geez, where to start? Let's just say our legal system has nothing to do with justice anymore. 3a speaks of the rule of law. Our system is now more color-of-law than rule-of-law. Those in power predetermine the outcome then mold the law into whatever is necessary to achieve it. And we have little to no protection of property rights remaining. Besides the limitations placed upon MY property by zoning ordinances, MY property may be seized at any time if it's deemed "for the greater good" which includes higher tax revenue for the state. RICO authorizes the State to seize all property when even the mere charge of "drugs" is levied at us. The property needn't and often isn't be returned when the charges are proved bogus. There is no security in any form of property when the State has the power to take it even when the owner commits no moral crime.

We have a huge list of foreign trade restrictions, so we can't be doing too well on point 4. Many countries are banned completely. Others cannot import this, that, or the other, regardless of market demand. Big Brother thinks it knows better. The fedgov acts as if it were the nation, instead of the people making such choices for themselves (a la free market). The market is not free internally, nor is it free in our trade relationships with other nations.

Losing on every point, it's no wonder our standard of living has begun to decline this past generation. Wait until another generation from now, and still another, and you'll be horrified to see how we've committed national suicide.