The recent jobs report brought a ray of hope. In the midst of a global pandemic, a pandemic-related economic collapse, and then the police killing of George Floyd spurring national and international righteous protests of injustice, it just appeared that employment was improving rather than decreasing. The stock market responded to the jobs report with an 800+ point improvement (DJA). Lost in the enthusiasm was the caution that the improvement failed to include the number of workers on furlough meaning they were not actually drawing an income, but that is not central to the point I want to make.
What is it we look to as variables indicating greatness? Trump seems to have focused on the stock market and now this upturn in the employment data. Even if we limit our focus to economics and not other areas nations might value are we assessing greatness appropriately. For example, employment numbers do not reflect that amount of money earned and whether this income offers a level allowing for adequate food, housing, and health care. For example, we have recently had much attention focused on a $15/hr minimum wage. Reich notes that 40% of working Americans make less than $15. Note that a 5 day, 8 hour week, for 50 weeks results in an annual income of $30,000.
I have tried to fact check the Reich statement and find the position is fairly close to what I can find elsewhere. Slate reports that 42% make 15 or less so there is additional evidence for this position.
What about the rising stock market as an indicator of greatness? Yes, the stock market has improved since the financial crisis of 2008. However, there is an important issue of how many actually benefit from the market and hence how well the level of the market is a useful indicator of the general situation in the country.
A couple of sources for insight into stock holdings as a useful variable. It appears that a focus on the market ignores the economic plight of many Americans.
… “despite the fact that almost half of all households owned stock shares either directly or indirectly through mutual funds, trusts, or various pension accounts, the richest 10 percent of households controlled 84 percent of the total value of these stocks in 2016.” [https://www.nber.org/papers/w24085]
Gallup reports that 54% own stocks [https://news.gallup.com/poll/211052/stock-ownership-down-among-older-higher-income.aspx]
Finally, there is this reflection on what might seem a disconnect between the present statement of the market and the economy.
Jim Cramer (Mad Money raises an issue that had occurred to me. The businesses facing the greatest hardships right now are small businesses. Many of them may be unable to survive an extended period of no or very limited income. The long-term consequences may be to shift greater advantages to larger businesses. These businesses are more likely to offer stocks and will benefit from a lower level of competition. Large businesses also use downturns to “right size” using the stress of a downturn to reduce the number of employees.
Perhaps a useful indicator could be fashioned from a combination of annual wage and employment. What proportion of those over 21 wanting to work are presently employed at an annual income of $45,000.