I have been retired now for close to five years. I worked as a professor at the University of North Dakota so my income was above average, but we were far from affluent. One of the things you try to figure out when retired and in good health is just how much you can afford to spend. If you are healthy, how much fun can you have and how much can you invest in other people and causes you believe are important. We have relaxed a lot possibly because the DOW is up 340% since 2008 and much of our retirement money was in the stock market while we were working. I remember the shock of how much we lost with the financial crisis of 2007-2008 and now must acknowledge that times have been very good since.
Politicians have the luxury of picking their facts when arguing for their performance. Trump has focused a great amount of attention on the stock market as his simple numerical way to represent the economy. Obama did a great job of ending the threat of a total collapse of the economy and the stock market turned around during his 8 years. This growth has continued during the first three years of Trump as President.
I am a Democrat and a strong believer in most Democratic goals. The issue of income equality has always been a concern. One might think that the good times we have been experiencing would contribute to improving the disparity between the wealthy and the poor, but this is not the case. My thinking on this issue has been influenced by Piketty’s work on the concentration of wealth. The disparity in wealth is partly driven by vast differences in salaries, but also by the increasing concentration of capital. I would think stock holdings would be a meaningful proxy for capital. The reality is that those making the least have experienced little increase in salaries and likely have little invested in capital such as stocks that increase in value beyond what is earned through work.
The graphics in this article from Business Insider tell the story very well. Less than 2% of those in the bottom 25% by income own an actual stock and about 30% of this group have any holdings in funds such as a 401K. The average value of the retirement account of individuals within this group is under $5000. Think a little about these numbers. When we take off an a retirement trip, I do.
So, when politicians point to the stock market as an indicator of what they have done for the economy consider just whom has benefited. Yes, it is even people like me. Consider those folks making $12 an hour without benefits when politicians try to convince you that the income inequality is not an issue the government should address.