Wage increases are just a byproduct of increasing commodity prices and the Fed printing money as fast as the market will accept it. The best way to stop the decline in purchasing power is to go back to the gold standard or tie our currency to some commodity. As long as we have the monetary policy that encourages moderate inflation, and views deflation as almost a big of risk as hyper-inflation, you will continue to see this graph go down. I asked Keyclone what his point was because this graph doesn't tell a whole lot about standard of living or what purchasing power the average American has (if purchasing power decreases but income doubles, then the only people who get screwed are the debtors... which just encourages people to take on more debt which can lead to an extremely dangerous cycle).

We'll never go back to the gold standard (without a revolution of sorts) which means that we'll have inflation and continue to see the purchasing power of the dollar decline. Why would the Fed, a private corporation, give up so much power willingly? As the infamous Rothschild quote goes, "Give me control of a nation's money and I care not who makes the laws."