In fact, the housing bust was big enough to erase all the gains the middle class had made the past 30 years—and then some. As you can see below, median households didn't add much wealth between 1984 and 2007. That's what happens when real wages don't increase, and the cost of a middle class lifestyle—housing, healthcare, and higher education—does. So, as Dean Baker points out, when the crisis did come, it devoured these meager gains and left the middle class with 20 percent less wealth than they had when it was "Morning in America."
But there's a big caveat here. Households don't necessarily stay in the same percentile from one year to the next, let alone for 30 straight. There's a life-cycle to it all. People start off with little, or negative, wealth when they take out loans to go to school or buy a house. Then they gradually build it up as they get bigger paychecks and pay back what they owe.
In other words, just because median households are poorer now than they were in 1984 doesn't mean that middle class families from back then have lost money since. It means that people at the middle now have lower net worths than people at the middle did then. Though, to put that in depressing perspective, it's still a heckuva lot better than households in the bottom 25 percent, whose wealth never grew during the good times, and then plunged 60 percent during the bad ones. That's because, for both the middle and working classes, real wages have been stagnant the past 30 years, and housing equity has taken a nosedive.
At this rate, it won't be long until the American Dream isn't even a memory for the middle class.