Who Owns Stocks?

American stocks are in the midst of their longest bull market ever, but fewer Americans are sharing in the wealth-creation than would have ten years ago. Because as Gallup reports, stock ownership is down sharply since the financial crisis, especially among the working class and the young.

U.S. stock ownership remains below where it was before the financial crisis in the fall of 2008, with declines since then evident among most major subgroups of the population. Adults aged 65 and older and those with an annual household income of $100,000 or more are two groups whose ownership rates have held firm. […]

Before the 2008 financial crisis, 62% of U.S. adults, on average, said they owned stocks. Since then, the average has been 54%, including lows of 52% in 2013 and 2016. In Gallup’s April 2017 update, 54% of Americans report having money invested in stocks.

To be sure, even Americans who don’t own stocks probably benefit indirectly from the skyrocketing Dow, which has been accompanied by a declining unemployment rate. But overall, the payout from the bull market has been highly uneven; while the wealthy and upper-middle classes have made big gains, the vast middle of the population has a smaller stake in the market than it used to.

Part of this is a problem of wages; if wages were higher, working-class people would have more money to invest. But it’s also a problem of institutions. In the blue model system that prevailed in the industrial age, ordinary peoples’ retirements were taken care of by defined-benefit pension systems. Today, saving and investing for retirement is a more work-intensive enterprise for middle-class people, and our society is still figuring out how to properly align incentives to make sure that everyone who is responsible will have a big enough nest egg.

There are a variety of tax and regulatory steps that might be taken to make it easier for people to put their savings to work, even if they are modest. But perhaps most importantly, our education system should start placing a much bigger emphasis on financial literacy, so that more people—especially young people, whose stock ownership rates have fallen most steeply—know how to make basic investment decisions, like buying into an index fund.

It will always be the case in our financial economy that the rich post the biggest gains from rising stock prices. But in the interests of healthy economic growth and social stability, the share of people who benefit should be widening, not contracting.