The Dow Jones hit unprecedented heights Monday, crossing 16,000 points for the first time. The S&P 500 index is also on track to see its best year since 2003 and surpassed $16 trillion in market value for the first time after a steady six-week rise in nearly every stock. While this year’s robust market growth is great news for Wall Street, the average worker is seeing little benefit.
Because the wealthiest ten percent hold 81 to 94 percent of all stocks, bonds, trust funds, and business equity, the stock market’s wealth rarely touches the wallets of the lower 90 percent. In fact, the stock market’s post-recession rally actually drove income inequality by expanding the net worth of the 8 million wealthiest households while the other 111 million households’ wealth shrank.
Meanwhile, the share of the economy going to workers’ wages has sunk to record lows. According to one recent study, wages stayed flat or declined for the bottom 60 percent of workers from 2000 to 2012. Job growth may have improved on paper, but most of the jobs added in the recovery are low-wage, temporary, and concentrated in the service and retail industries.
Sky-high corporate profits, feeding off increased worker productivity on lower wages and fewer employees, have thus far helped insulate the stock market from this reality.
But Congressional hijinks over the budget have strained this illusion; sequestration cuts hit consumer spending and GDP growth hard this year, and House Republicans’ continued brinkmanship after the government shutdown has spurred widespread uncertainty among consumers and Wall Street investors alike. Just a few hours after hitting Monday’s record highs, the market wavered upon the release of a National Association of Home Builders/Wells Fargo Housing Market Index finding that home builder confidence flatlined this month, as prospective home buyers are “holding back because Congress keeps pushing critical decisions on budget, tax and government spending issues down the road,” according to NAHB Chairman Rick Judson.