- Trump has repeatedly touted the stock market as a scorecard to show the economy is strong and reaching new highs.
- But the stock market doesn’t entirely reflect the state of the economy.
- There’s a widening gap between wage and stock growth, and its only accelerated in the Trump era.
- The S&P 500 has climbed more than 40% since Trump took office in 2017, compared to only a 9% bump in wage growth during the same period.
- Even with larger paychecks, employees now have to deal with the rising price tags of education, housing, and healthcare.
- Visit Business Insider’s homepage for more stories.
Over the last three years, President Donald Trump has touted the stock market as one of his favorite scorecards demonstrating the health of the American economy.
But the stock market doesn’t entirely reflect the state of the economy.
The market boom in the Trump era is at odds with the sluggish wage growth in the same stretch of time. Over the past three years, there’s been a gap between stock and wage growth in the United States that’s only widening, as illustrated in the graph below.
- Andy Kiersz/Business Insider
The benchmark S&P 500, widely accepted as a strong gauge of market health, has climbed more than 40% since Trump’s inauguration in 2017. By contrast, the average hourly wages of workers only climbed 9% during that period.
Even if they took home slightly bigger paychecks, employees have also confronted with the rising price tag of housing, education and skyrocketing healthcare costs some economists now compare to another tax on their income.
There’s also another huge factor locking out middle and working-class Americans from sharing in the rewards of a bull market: Half of them just don’t own any stock. The top 10% of American households own the lion’s share of stocks, around 84%.
The market trend upward does, however, hold significant benefits for people who have invested directly or through a retirement plan, as their portfolios accrue more value.
Economists increasingly say disparities between market and wage growth is the result of policy decisions made over decades by lawmakers and employers. Unions have been throttled, contributing to a rise of inequality and wage stagnation. And tax rates continue to be slashed for the highest-earning Americans as well as corporations.
Wages haven’t substantially increased despite the lowest unemployment rate since Lyndon Johnson’s presidency 50 years ago. That should theoretically compel employers to raise pay to compete for a scant supply of workers.
Recent wage gains, though, are mostly impacting low-wage workers and they have experienced the fastest pay increases. Experts say it likely has to do with the surging number of states and cities raising the minimum wage. The effective average around the country is now around $12 an hour.
Democratic Rep. Alexandria Ocasio-Cortez said in a tweet earlier this week that “the Dow soars, wages don’t. Inequality in a nutshell.” The data does suggest she is right.