Not cheap for Chinese people. Still very cheap for Americans, though that's changing fast. The average Shanghainese makes around $7kUS/year, depending on the source of the estimate. Census records aren't very good in China, and even if they were, things are changing too fast for them to be valid for long anyway. Great 1-hour massages can be had downtown for about $8US.
Cab drivers are definitely not getting rich there. The person I spoke to wasn't sure, but he thought cab drivers paid a monthly rental of about 5000RMB/mo for the cabs. On top of that they have to pay for gas (and maintenance?), which costs about the same as in the US. So they spend most of the month just trying to cover their expenses, and a few days making gravy.