The increase in income inequality has led some to fret about the shrinking middle class in America. See, e.g., this piece by Krugman from a few years back. And the data actually do show that the middle class is shrinking, at least if measured by static income groups. But not because of rising income inequality:
The middle classes fell too, though by less. The sum total across the $35K to $75K categories fell by 5.4 percentage points. In other words: the net movement of households was an 11.5 percentage point gain in households above $75K and a net reduction of 11.5 percentage points in houses below $75K. So the percentage above $75K rose from 18.9% to 30.4%. That is, it increased by over 50%.
Let me repeat that: over 30% of US households in 2006 earned above $75K compared to under 20% in 1980. Over the same period, the percentage of US households earning under $35K fell from 42.8% to 36.7%. Fewer households are poor, fewer are middle class, and a hunk more are above $75K. (And in case you were wondering, those general trends hold for black and hispanic households too - with the percentage of black households under $35K falling by 10.9 percentage points and the number above $75K increasing by 8.9 percentage points, for example.)
Yes, those numbers are adjusted for inflation (2006 dollars) but they are not adjusted for the decline in household size or the real improvement of much of what we buy (i.e. a $1,000 computer in 1995 is much worse than a $1,000 computer in 2009 even though they show up as the same thing in the data). These would both understate the improvements in life quality, perhaps by quite a lot.
This gets at the eternal "absolute vs. relative gains" debate: in absolute terms, America has done very well in the past 30 years. We have more wealthy people and fewer poor and middle-income people. On the whole, the rising tide has lifted all boats. But it has lifted some boats much faster than others. Normative political economy is largely determined by which of the two is deemed more important.