Tuesday was a banner day for the American economy at large. The Dow Jones Industrial Average, the stock market benchmark tracking 30 large corporations, has never closed so high.
[The Dow] surged to its highest closing level ever, finally overcoming the losses tied to the financial crisis on the back of a tenacious stock rally that began in March 2009. [….]
The Dow advanced 0.9% to 14253.77 Tuesday to top its previous high of 14164.53, set in October 2007.
That’s all well and good. But a well-regarded financial journalist, Heidi Moore, pops the bubble of optimism in the Guardian: “[D]on’t trust the Dow. It doesn’t have your best interests at heart.” Moore continues:
It’s hard to picture a family driving back from the food bank – poverty is also at all-time highs in America, by the way – chanting “three cheers for Alcoa! Let’s hear it for Caterpillar!” Americans, no matter how patriotic, don’t pull out the pom-poms when it’s a good quarter for Cisco. We just wait quietly for the riches to trickle down, for the companies to start hiring and for the rest of us to feel rich.
That trickle-down is not happening, and we know it’s not happening. Companies are sitting on $1.4tn of cash, according to the Federal Reserve.
As Moore points out, most Americans don’t need to be told that the stock market isn’t doing them any favors. Yesterday’s Dow news seemed discordant with the general mood; while the economy is no longer in a technical recession, unease abounds—Washington, for example, has so far been unable to stop “sequestration,” the huge spending cuts which, according to one study, will eliminate 2.14 million jobs.
We can hardly afford that. Three percent of American workers are in long-term unemployment—a technical-sounding term for a wrenching, family-destroying plague. (“Long-term” means more than six months without a job.) Three percent is “triple its 2001-07 average” according to Bloomberg Businessweek. The kicker: sequestration will slash unemployment checks for that exact group of workers by 9.4 percent, according to the White House (via the Huffington Post).
All of this makes it even more frustrating that workers are struggling. As the New York Times reported Sunday, the stock market almost makes a mockery of the state of actual wage earners:
[T]he split between American workers and the companies that employ them is widening and could worsen in the next few months as federal budget cuts take hold.
That gulf helps explain why stock markets are thriving even as the economy is barely growing and unemployment remains stubbornly high.
With millions still out of work, companies face little pressure to raise salaries, while productivity gains allow them to increase sales without adding workers.
The Atlantic has another angle on that maddening dichotomy. While household income data are not available any more recently than 2011, the numbers are bleak compared to the surging market: “the last recorded real median US household income was 8% lower than its 2007 peak.”
This labor economy is a sellers’ market for employers posting jobs—and it may make companies feel they can exploit their employees without fear. The Harman Firm is dedicated to justice and fair treatment for all workers; in many cases, achieving that justice requires litigation. Contact us today with any questions about workplace discrimination, illegal pay practices, or other employment law issues.