By Nathan Traini
Staff Writer & Reporter
After Donald Trump won the Presidential election earlier this month the stock market turned down starkly, but quickly rebounded.
When it seemed inevitable that Trump would win, the Dow Jones, which is a price-weighted average of 30 significant stocks traded on the New York Stock Exchange, spiraled down some 800 points according to CNBC.
The market since then has rebounded with the great turnout for Black Friday and Cyber Monday, but according to Gallup, this means nothing to the 48% of Americans who don’t own any stock.
The reason why 48% of people aren’t invested in the stock market is because they don’t have money to even save for themselves to retire. In America, according to the Social Security Administration, 45% of all wage earners make less than $25,000 a year. Instead of investing for the future this large swath of Americans is wondering if their next illness, or car trouble will put them in bankruptcy.
For that vast minority of Americans, they watch the stock market while their economic lives either stagnate or plunge. This situation is mainly due to the leveling off of wages for the last 40 years, while productivity soars, as does the cost of living.
The news media is living in a different reality than what the middle class of America is experiencing. It’s not a bubble in the economy but these elites live in their own economy bubble. A bubble where the economic plights of of everyday people are not even in their realm of thought.
It is always good to know a little history before diving into the bottomless pit of numbers and statistics that is our economy. The Economic Policy Institute, which is a nonpartisan nonprofit think tank created in 1986 to include the needs of low and middle-income workers in economic policy discussions, shows us the economic history of our country. The EPI illustrated how wages rose with productivity from 1948-1973 with wages rising 91.3% and productivity rising 96.7%. This means that however much money you made was directly tied to how much you produced for the business you worked for.
After 1973, that relationship stopped and separated drastically. From 73’ to 2013, productivity increased by 74.4%, but wages increased by only 9.2%.
Where did that money go? Well, the EPI shows us that in 1970 the average CEO compensation of the top U.S. companies was around 20 times that of the average worker. Since then, the average CEO pay has increased to 296 times of what a typical worker makes.
Then, after you factor that in, most manufacturing jobs left the U.S. and a signal to that was the recent news that Walmart, being a service industry, overcame General Electric as the largest employer of American workers.
Everybody knows we get most of our products from overseas because you can pay people orders of magnitude less than American workers to make those products. This is where a lot of the manufacturing jobs went. How though, do those products, get to the U.S.? They are mostly shipped on huge container vessels that are owned by some of the biggest shipping companies in the world. One of these big fish bit the dust when the Hanjin shipping line declared bankruptcy. This bankruptcy is an indicator that the middle class consuming rate, which fuels our economy in the U.S., is at an all-time low, according to Richard Wolff.
Richard D. Wolff is an economist who teaches at the New School University in New York City. Wolff earned a BA and a MA in History from Harvard and Yale respectively. He also earned his masters in economics from Stanford, and later his PhD in economics from Yale. Wolff argues in his most recent monthly talk in November called ‘Global Capitalism: Monthly Economic Update’, that the shrinking consumer base, the American middle class, can’t continue to buy with the same fervor they once did. All the while, the rich continue to get richer and the middle class and poor have incomes that don’t change or decrease while the cost of living increases.
The official unemployment number doesn’t take into account people who work part-time but wish to work full-time, and people who have given up looking for work. If it did, the unemployment percent would be closer to 10% than the deceptive number of 5%. All of this data culminates in a bubble of economic reality that the news pundits and people in Washington D.C. live in.
These bubble dwellers look at the stock market, the “official unemployment” numbers, and the jobs gained (which are mainly low wage service industry jobs) and say the economy is doing great. To everyone else living in the real world, we see a plethora of ghost towns and dead zones.