Economy

Why So Many People Are Unemployed and the Stock Market is Doing Great

Monopoly Money
Written by Steve Rhode

Since the economic impact of the pandemic has hit with massive unemployment and businesses closing, I’ve been asked several times how can things be that bad when the stock market is doing so well.

I thought this video did a really good job of explaining why the stock market is not an indicator of how people are doing individually.

As relief checks have stopped flowing, so has consumer spending. In July spending had dropped by 75 percent from where it was in May.

You might even hear that business bankruptcies are accelerating. It is true that business bankruptcies have passed the number caused by the Great Recession of 2008.

But here is why the bankruptcies of Hertz, retailers Neiman Marcus, J.C. Penney, Brooks Brothers and J. Crew, don’t matter that much.

The companies that drive the stock market are typically larger companies like Apple, Amazon, Google, etc.

Who the Stock Market Works For

The stock market works for the wealthiest investors since the top 10 percent of wealth holders now own 87 percent of all stock.

If you are invested in the stock market for your retirement you are enjoying the ride. But if you think the stock market reflects the economic reality of 90 percent of people in America, that would be an incorrect assumption. It certainly does not represent the growing economic inequality between the haves and have nots.

And to close with another statistic, the richest 1 percent of American households own 50 percent of stocks.

We Don’t Agree on Much

People that identify themselves as Democrats or Republicans don’t agree on much when it comes to solving the shrinking middle class and rising levels of poverty.

Sixty percent of Republicans blame poor life choices for economic inequality while Democrats blame discrimination against racial and ethnic minorities. – Source

Interestingly the one solution both groups almost agree on is the need for workers to have the skills they need for today’s jobs. Yet when it comes to how people get that training, it is going to result in more people going deeper into student loan debt and that can lead to lifelong financial servitude.

READ  Women and Financial Insecurity

One idea to increase worker skills and income opportunities has been to make college tuition-free at public two-year colleges. But only 36 percent of Republicans and 69 percent of Democrats think that a good idea.

So how would workers with declining incomes pay for or get access to current education and training?

What do you think? Comment below.




About the author

Steve Rhode

Steve Rhode is the Get Out of Debt Guy and has been helping good people with bad debt problems since 1994. You can learn more about Steve, here.

2 Comments

  • So how would workers with declining incomes pay for or get access to current education and training? I think there should be more encouragement for people to get trained in technology-based jobs. This training should be offered in the vocational schools and the community colleges and it should be low cost. Louisiana has many good jobs in the energy sector, and the training programs that lead to these jobs often lasts only a year or even less.

    I also think young people with only a vague idea of their vocational goals should stay out of liberal arts and humanities programs, because degrees in those majors do not lead to good jobs. People who take out student loans to get degrees in soft majors (social sciences, liberal arts, humanities) often taken on more debt that they can ever pay back.

    Unfortunately, the for-profits have lured people into vocational and technical programs and charged high tuition. The public schools should be offering these programs and marketing them more aggressively.

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