For decades, many financial experts championed the idea that equities are hands-down the best place an investor could put their money. After all, stocks have historically offered the highest long-run returns, and the proliferation of mutual funds and retirement vehicles grounded in the markets has familiarized the American public to the idea of owning equity.
But new data from Pew Research suggests that more than half (53 percent) of Americans have absolutely no money in the stock market, including retirement accounts. This reality is often overlooked when people make judgements about the relative health of the economy and what that means for Main Street. The recent stock market highs have not been affecting everybody.
Perhaps unsurprisingly, there is a huge amount of inequity in who has been able to participate in the recent bull market.
The Pew data show that just 15 percent of people with a family income of less than $30,000 per year are invested in the stock market. As families earn more, their participation in the stock market increases. Fifty-five percent of those who earn between $30,000 and $75,000 per year are invested in the market, while 80 percent of those who earn $75,000 or more are.
What this means is that the rise in stock prices since the financial crisis has widened the distance between those at the top of the income scale and those at the bottom. This is reflected in various observations, such as the fact that CEO pay has ballooned in the past few years — largely thanks to increases in the value of stock awards — while median worker pay has remained flat.