After years of relatively low stock ownership in the wake of the Great Recession, the share of Americans who are invested in the stock market climbed to the highest level since 2008 this year. That’s according to a recent Gallup poll, which found that 62 percent of U.S. adults own stock in one way or another.
While equity investing is widely considered a good thing – after all it gives people the opportunity to participate in economic growth – it has the tendency to increase wealth inequality, as lower-income groups are much less likely to invest in the stock market. According to Gallup, 87 percent of U.S. adults with a household income of $100,000 or higher own stocks. Among those with a household income of less than $30,000 stock ownership falls to just 25 percent. And because the wealthy tend to have larger portfolios than lower-income investors, it can be assumed that the real distribution of stock market gains is even more extreme than that.
One recent example of stock ownership contributing to inequality is the Covid-19 pandemic. While low-wage workers were disproportionately affected by job losses, most wealthy Americans not only kept their jobs but also profited from a surge in share prices following the initial and surprisingly brief Covid dip. So while getting through the pandemic somehow with the help of government benefits was the best that many low-income Americans could hope for, wealthy Americans accumulated more wealth, even in a time of crisis.
