While stocks hit their records boosted by a better than expected June jobs report, the record highs aren’t creating a lot of buzz for the average American worker. That may at first seem surprising, but when looking at the data on who owns and doesn’t own stocks these days, it becomes more apparent why there isn’t more broad celebration going on with the latest records.
How bad is it? While as many as 21.3% of families directly owned stocks in 2001, that had shrunk to only 15% as of 2010, according to the Federal Reserve, in a 2012 report. Families do have access to stocks in other ways, such as through retirement accounts, but it still only lifts the number of Americans with stock ownership to about 50%. Even worse, it doesn’t look like many are going to be investing in the market anytime soon. At the beginning of 2014, 50% said investing money this year in the stock market would be risky, according to a Gallup poll.
Who’s benefiting from the latest run in stocks? The wealthy. A Pew research report puts the divide into perspective. The wealthy and educated are much more likely to be invested into the stock market than others. Households with earnings in excess of $75,000 have an 80% stock market investing rate, while 77% of those with a college degree have some money in stocks. This compares to a 15% rate of stock holders in households making less than $30,000 a year. In fact, most Americans are no longer in the stock market, with 53% saying they completely avoid the stock market in any form these days.
What this all means is that the stock market reaching new heights is only helping the personal finances of a certain segment of the nation, and not everyone across the board. While the record closes are great news for those who own stocks, it doesn’t make much of a difference to a majority of those living here these days. This could be why we aren’t seeing more interest in this record breaking run from the average man on the street — the record closes and new highs simply don’t matter because they have no impact on most people’s accounts.
(Photo courtesy of Michael Daddino)