Lauren Moye, FISM NEWS
As the stock market rose 40% from its pre-pandemic January 2020 levels, statistics showed that the most elite and wealthy Americans have profited the most from the pandemic. New data from the Federal Reserve shows that the wealthiest top 10% now own an overwhelming 89% of all U.S. stocks. This new record highlights the still-growing gap between the wealthiest and poorest socioeconomic classes.
The fact grows even more troubling when you consider that this wealth increase also came at a time when more new investors have entered the stock market than ever before. Robinhood, known as the investment app for everyone, now boasts 22 million accounts, and nearly half of these have been added in the past two years.
“They might account for a larger share of trading activity, but that’s different from ownership and wealth,” Steven Rosenthal, a senior fellow at Urban-Brookings Tax Policy Center, told CNBC News.
While experts attribute the growth of little man investors in part to stimulus checks and more disposable cash due to the COVID-19 changing spending habits, it’s also clear that lockdown policies and other COVID-19 politics have helped the elite grow. And when it comes to the wealth gap, there are other factors at play.
The average Robinhood account contains around $4,500. A smaller initial investment limits the number of stocks that can be purchased. This then directly affects the dollar amount that a return on investment can bring. In addition, many of the bottom 90% of Americans bought into their stocks at a higher price than their wealthy competitors.
According to the Federal data, smaller investors only reported an average 33% gain, compared to the 43% gain shown by the elites. The bottom 90% cumulatively gained $1.2 trillion compared to the top 1% gain of $6.5 trillion.
Lockdown measures were a key point of contention in the 2020 election cycle as then-President Donald Trump accused Democrat-run states of reopening too slowly for the economic wellbeing of their citizens. Meanwhile, Democrats campaigned on a “tax the rich” slogan.
The latest stats seem to lend credibility to this call, especially as senators fight over a budget reconciliation bill that includes a possible tax hike on the rich. House Representative Pramilla Jayapal, who has attempted to pressure Democrat holdouts in the Senate to vote on this bill, tweeted, “The wealth of billionaires has grown astronomically throughout the pandemic, while working families have struggled to keep food on the table. It’s time to tax the rich and invest in people.”
Yet it’s mainly Democratic policies that have contributed to a growing wealth gap.
“This gulf between the top and the bottom of income and wealth has gotten wider,” said Mark Zandi, chief economist at Moody’s Analytics, to the Hill. “Recessions are generally hard on the weak, the people who don’t have a cushion. But this pandemic recession is unique and very idiosyncratic.”
The Hill reported the pandemic’s negative impact on low-income earning professions, like restaurant staff, as another way that lockdowns increased the wealth gap. Some changes, like an increase in automated cashiers, will reach far into the future.
While the pandemic impacts the wealthiest, politicians themselves have been in a position to see personal gains. Democrats are no exception. For example, USA Today estimated in March that Nancy Pelosi’s 2020 net worth was $251 million.
Democrat Representative Tom Malinowski once told MSNBC, “This is not the time for anybody to be profiting off of selling ventilators, vaccines, drugs, treatments, [personal protective equipment] anywhere in the world.” However, he personally traded $3.2 million in stocks during the pandemic with one-third of that in medical and technology stocks.