Writing never paid all that well. There have always been a few stars like Dickens or Hemingway or Rowling who could get what they wanted from publishers or work around them. The best advice for anyone who wanted to write was not to quit one’s day job.
My father was a tax accountant who had a few writers among his clients, so I never had illusions about the writing business. (It was mainly 1099s, not W2s. Depression era kids like my father wanted W2s.) I think it is generally harder to make a middle class living than it used to be, especially for young people, but that’s been a result of our nation’s general downward mobility, a matter of policy.
Writing was always part of the gig economy whether you had a big publisher contract or just did work for hire on individual projects. It was always about selling the next bunch of words. Having fewer big publishers doesn’t help, but their big advantage is that everyone knows their names. People return their calls. It has always been possible to work around them. If anything, it is easier than ever.
