I suppose this misunderstanding boils down to semantics. By definition they are objectively better off. However, past a baseline threshold for human survival it's argued that a person's subjective perception of well-being is relative to that of others around him. Objectively, we are many times better off than we were pre-industrialization in almost every way imaginable, but does that make us many times happier or more satisfied than people who are unaware of such a standard of living? The argument is that they would perceive their well-being as much worse if they were aware, even if nothing has objectively changed.