By Heather Long
January 5, 2018
President Trump cheered as the Dow topped 25,000 for the first time ever Thursday, claiming that the record for the stock market index is evidence that “make America great again” is happening. There's no doubt the U.S. economy and Wall Street have momentum heading into Trump's second year as president, but worker pay remains frustratingly flat. American wages rose a sluggish 2.5 percent last year, according to a Labor Department report released Friday morning. That's the same rate of wage growth as under President Barack Obama. Historically, wages have grown more than 3.5 percent in a typical economic upturn, but that hasn't happened in this expansion. Trump is facing a similar problem that plagued Obama: The stock market is soaring, but wages are stagnant. The Dow Jones industrial average jumped 25 percent in 2017 and is up more than 30 percent since Trump won the election, but those gains largely accrue to the wealthiest Americans, including many of Trump's donors and close friends. Almost half of the country doesn't have a single dollar in the stock market. While some in the middle class do invest via pension funds and 401(k) retirement plans, only a quarter of American households have more than $25,000 in the market, according to a Deutsche Bank report released this week.
The Dow Jones industrial average jumped 25 percent in 2017 and is up more than 30 percent since Trump won the election, but those gains largely accrue to the wealthiest Americans, including many of Trump's donors and close friends. Almost half of the country doesn't have a single dollar in the stock market. While some in the middle class do invest via pension funds and 401(k) retirement plans, only a quarter of American households have more than $25,000 in the market, according to a Deutsche Bank report released this week. So far, only 18 of the companies in the S&P 500 stock index have cited the tax cuts in announcing additional pay of any kind. Only five of those companies — all banks — announced a true wage hike, lifting hourly wages to at least $15 an hour. The rest are offering workers a one-time bonus (typically of $1,000) or a modest amount of additional money in a retirement plan. One-time bonuses and perks like gift cards became popular during the Great Recession as a way for companies to reward employees without hurting the bottom line because they don't raise hourly wages. Economists say 2018 could be the year companies finally give workers more money, not because of the tax cuts but because it's getting harder to find workers. The U.S. unemployment rate is already at a 17-year low of 4.1 percent, and it's expected to fall below 4 percent this year. JPMorgan's chief strategist predicts the jobless rate could fall as low as 3.4 percent this year, the lowest level since 1969.
