The Dow Jones Industrial Average has been floating at or above the 17,000 mark in the past two months, an all time high. There has been a stumble here and a wrinkle there, but even with a weak unemployment report for August, the Dow has remained over 17,000. This compares with a Dow of 13,000 just a year ago (or a 30% gain), and is generally seen as a sign of economic progress and of increased wealth.
Who gets the wealth, though? Fifty-two percent of US adults own stock, which includes mutual funds, Individual Retirement Accounts, and 401-k accounts down from 65% in 2007. The drop in the level of stock holdings can be at least partly attributed to the Great Recession, when high levels of unemployment forced people to go into their savings to survive. Maybe, too, dissolved stock holdings to help them with housing crises and underwater mortgages. For those reasons, and for many others, stock ownership is falling.
While half of the overall population owns stock, bonds or mutual funds, a 2011 Washington Post survey reported that one in four African Americans and one in six Hispanics had such holdings. These are the folks who were disproportionately hit by the housing crisis, and are now unlikely to gain from the surge in the stock market. Some folks just can’t catch a break.
Now, the latest unemployment report suggests that there are fewer gains in the labor market than expected. While the overall unemployment rate has ticked down from 6.2% to 6.1% only 142,000 jobs were created, about one hundred thousand fewer jobs that economic forecasters had been expecting.
Tepid job growth bodes ill for the so-called recovery that is optimistically referenced. The Black unemployment in August was unchanged from July at 11.4%, with the rate for Black men falling, and that for Black women rising. Usually, Black men have a slightly higher unemployment rate than Black women.
While the racial unemployment rate still reflects inequality, and the general unemployment rate is too high to be optimistic about recovery (though the rate is down a full percentage point from a year ago), equally concerning is the level of wages that has not grown significantly in the past year. In the last year, the hourly wage has grown by just 50 cents, from $24.03 in August 2013, to $24.53 last month. With unemployment rates falling, it would seem that employers would have to work harder to compete for workers, but the extremely small increase in hourly pay suggests this is just not the case. While these data are not broken down by race, the fact that the average African American household earns just $32,000 a year, compared to $51,000 for a white household suggests that there is a similar difference in hourly wages.
The movement to increase the minimum wage has momentum, but Congress can’t seem to understand how challenging it is to earn the minimum wage in a stagnant labor market. The minimum wage hasn’t changed in five years. Meanwhile, Congressional pay has risen from $129,500 to $174,000 between 1992 through 2014. Congress also has its pay inflation-adjusted. President Obama has chided Congress that “America needs a raise,” last addressing the point on this Labor Day. And fast food workers have taken it to the streets, demanding that their employers pay them $15 an hour. Dozens were arrested in cities around the country as they disrupted traffic in busy intersections to make their case known.
The juxtaposition between minimum wages that have not been adjusted in five years, Congressional pay that continues to rise, and a 30% stock market gain in just a year are simple indicators of our nation’s inequality. Those at the bottom aren’t seeing any trickle down from stock euphoria. There has been little increase in the amount of work available, and the amount of pay that it brings. America needs a raise, and congress needs to spend just one week living on the minimum wage. That might give them an insight or two about how some people are forced to live.