Why a Booming Stock Market Does Nothing for the Average American
The stock market is not the job market. It doesn’t tell you about Americans’ savings habits, or whether they’ll ever be able to buy a home. Worst of all, a rip-roaring, record-setting stock market does nothing for the poorest Americans.
In fact, it doesn’t do much for most middle-class Americans, either. The thing about stock is, you have to buy shares and hope they rise. Millions of people can barely afford their rent. Buying expensive stocks doesn’t seem to be on the menu.
Basically, if you cheering a rising Dow average or crying when an index drops 800 points, you’re probably in the minority. Here’s why a booming stock market means nothing to the average person.
1. Fewer than 19% of taxpayers own stocks.
When a day trader or U.S. president is bragging about stock gains, he’s really only cheering on behalf of 18.7% of taxpayers. A higher number of Americans have stock via a retirement plan, but the number of those holding stock directly doesn’t even reach one in five.
Next: In the poorest states, even fewer people own stocks.
2. In Mississippi and other states, only 10% are in the market.
According to IRS data reported by CNN Money, just 10% of taxpayers — one in 10 people — in Mississippi claim income from stocks. Most of the states in the southern half of the U.S. showed fewer than 15% of taxpayers in the market.
Next: If you’re a millionaire, owning stock is much more common.
3. Millionaires have an 88% participation rate.
The stock market really only benefits those with big portfolios, and the concentration is among the wealthiest Americans. Some 88% of millionaires reported stock income, IRS data shows.
That’s how 82% of wealth created in 2017 went to the top 1%, as Oxfam relayed in its annual report. When Donald Trump celebrated the fabulous wealth the markets delivered over the year, one group was getting the message.
Next: Among the largest part of the workforce, hardly anyone owns stocks.
4. The largest chunk of the workforce owns zero stock.
The IRS reported 152 million tax returns filed in 2016. If you break them down by income, the lion’s share of returns (40%) came from people earning less than $25,000.
In this group, just 8% own stocks. The other 45 million people could care less whether the Dow is at 18,000 or 25,000.
Next: About 50% of Americans have nothing in a 401(k).
5. Half of America doesn’t see a 401(k) rise with the markets.
While the percentage of Americans owning stocks directly is low, some would argue rising markets push their retirement plans up in value. That’s true on some level, but about half the people employed in America have no retirement savings, pension, or other attachment to the market whatsoever.
Next: Little wage growth comes with stock booms.
6. There’s been no wage boom.
With all the stock gains in recent years, America’s workers have seen minimal wage gains. An especially telling sign came following the massive windfall corporations got from the GOP tax plan.
Instead of offering real wage increases for employees, the few companies that spread around any cash offered a one-time bonus of $1,000. Spread across years of work (or even one year), that doesn’t have any significant impact on a family’s quality of life.
However, American companies did invest billions juicing their own stock price.
Next: Compared to $2.5 billion in bonuses, companies spent $85 billion in stock buybacks in 2018.
7. Most of the tax cuts went to stock buybacks.
Politicians will say anything trying to get elected or have a law passed, and the GOP tax plan was no different. As corporations saw their tax rates slashed 40%, the average worker got little to nothing. (In fact, some will see their taxes go up.)
What the companies did with the windfall is telling. While 2% of Americans got extra from their employer (amounting to $2.5 billion), the newly flush corporations spent $85 billion on stock buybacks in the first weeks of 2018.
Buybacks are known to juice the stock price which, in turn, benefits those in the executive offices.
Next: Just see what America’s least-liked corporations did with the money.
8. Wells Fargo, Comcast mixed buybacks with layoffs.
A remarkable thing happened when the tax cuts went through Congress and the White House. You actually saw companies like Comcast spending billions on buybacks after laying off employees.
Kimberly-Clark is another huge company that used the money to “restructure” while laying off thousands. Wells Fargo, the bank behind so many scams over the years, led the pack as of February 2018 with $22.5 billion in buybacks.
Next: It was called a tax “scam” for a reason.
9. The tax plan worked like a scam.
If you asked some people — well if you asked us — there was a simple way to guarantee workers would benefit from the GOP tax cuts. All Paul Ryan, Mitch McConnell, and the Trump administration had to do was tie the cuts to employment and wages.
For example, corporations that hired a certain amount of workers or raised wages over 10% would get their massive tax cuts. Those who didn’t would have to keep trying.
Of course, that never happened. Cheer or cry all you want for the Dow; just don’t expect the average American to join you.
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