Have American Middle Incomes Stagnated?

Yes, says Paul Krugman and many other class warriors, and it's due to rising income inequality. Not so fast, says the Federal Reserve. The rub? Basically, Krugman (et al) forget to include noncash payments (i.e. retirement accounts, health insurance, stock options, etc.) in their calculations. These are all compensation for work which really didn't exist several generations ago. Now, they represent a very significant portion of total compensation for many American workers, especially in the middle class.

(ht: Greg Mankiw)