As the Dow Jones industrial average crossed the 13,000 milestone for the first time on Wednesday, it marked yet another record closing on Wall Street. Over the past six months, record-setting days have become almost commonplace at the nation's financial hub.
In fact, today the Dow industrials closed at 13,105.50 for their 18th advance in 20 days. And the Dow was not alone in its success. All of the major Wall Street indexes are set to complete their fourth straight winning week, the longest such streak since October.
This week also saw the Standard & Poor's 500 index close at its highest since September 2000, and the Nasdaq close at its highest since February 2001.
How good has this streak been? Well, it took just six months for the Dow to surge from 12,000 to 13,000. These are heady days on 'The Street'. By comparison, it took 7 1/2 years for the blue chips took to go from 11,000 to 12,000.
Why the recent successes? Corporate earnings. Profits at big U.S. companies have soared, and we've just witnessed a record-setting run of 14 consecutive quarters of double-digit growth. According to the Commerce Department, large U.S. companies saw their profits jump 21.4 percent last year on top of a 12.5 percent gain in 2005. Those are very nice returns.
But the period since October has been particularly remarkable for the Dow. The blue-chip index has hit 36 record closes since the beginning of October. While that's absolutely remarkable, it's also likey to be entirely unsustainable.
All of this is good news for anyone who owns stocks -- particularly blue-chips -- and that amounts to millions of people. But for about half of our fellow citizens, stock market gains have no relevance whatsoever.
Fifty-one percent of Americans don't own any stocks at all. Though some Americans have done quite well during this stock market boom, and period of record corporate earnings, others are still struggling and haven't realized the same gains or good fortune.
Though worker productivity has increased significantly this decade, wages have lagged behind. The median household income for American families, adjusted for inflation, has fallen for for five straight years.
The stock portfolios of many Americans are set aside expressly for retirement. But with just under half owning stocks, the rest will have to count on some other form of retirement income. Right now, the prospects for them don't look very good.
Less than 20% of U.S. workers are in employer pension plans, and many of those plans are underfunded. Many people will rely solely on Social Security for retirement, but that typically replaces less than 40% of pre-retirement income. People would have to downsize an awful lot, to the point of austerity, to make that work.
According to government figures, 37% of U.S. households do not have a retirement savings account of any kind. And according to a 2004 report by the Congressional Research Service, the median value of existing accounts was just $27,000. Considering that the median household income in 2005 was $46,326, those retirement accounts won't last long.
More than half of all Americans (52%) have less than $25,000 saved for retirement, and that includes 39% in the 55-plus-category. Since that group is closest to retirement age, they're the ones that should really be worried.
Income inequality has also become a big problem in America -- so much so that Congress seems to be concerned, or at least they're trying to convince us they are.
Executive pay packages at public corporations typically equal 500 times the salaries of workers at those companies. But just 15 years ago the average CEO made 140 times what a worker at his company earned. And the average CEO of a Standard and Poor's 500 company now receives $14.78 million in compensation. Nice work, if you can get it.
So last week the House voted to give shareholders at public corporations a voice when companies losing money or laying off workers are paying executives eight- and nine-figure salaries, plus retirement packages.
According to Rep. Brad Miller, a Democrat from North Carolina, the aggregate compensation of the top five executives is now 10.3 percent of the profits of public corporations. To put it bluntly, that's out of whack.
The bill passed 269-134 and now goes to the Senate. However, it was opposed by the White House and most Republicans. Presidential hopeful Barack Obama also introduced a similar bill in the Senate last Friday.
Economic growth has been good for many Americans these last few years, but not for everyone. The current minimum wage has been frozen at $5.15 an hour since September 1997 -- the longest period without an increase since the standard was first established in 1938.
That amounts to $10,712 annually for someone working full time. Adjusted for inflation, the minimum wage is currently at its lowest level in 50 years. To give some perspective, it now takes more than a full day of work for a minimum-wage worker to fill their gas tank -- assuming he/she can afford a car.
According to the Department of Health and Human Services (HHS), the federal poverty threshold is $10,210 for an individual. So a person working full-time at the minimum wage would just barely clear that level -- by $502, to be exact.
But the poverty threshold for a family of four is $20,650. If both parents earned minimum wage, their combined annual income would amount to $21,424, putting them $774 above the threshold. Many single people, especially those in big cities, would find it quite difficult to live on less than $21k a year, never mind four people trying to get by on that amount.
A Congressional agreement that would raise the minimum wage to $7.25 over two years could be voted on within days. Democrats promised to raise the minimum wage during the campaign leading up to last fall's elections.
After reaching a 26-year low of 11.3% in 2000, the number of Americans living in poverty increased to 12.7% in 2004, or by nearly 5 1/2 million people. Sadly, 37 million people were below the official poverty thresholds in 2004. That number remained unchanged in 2005, meaning that more than one in 10 citizens -- the highest percentage in the developed world -- live below the poverty line in the U.S.
To illustrate how disparate wealth inequality in America has become, consider this; according to Census Bureau data, the top 20 percent of earners make over half the national income. At the same time the bottom 20 percent take home just 3.4 percent.
America prides itself on being the "land of opportunity." That may be so. The United States has 269 billionaires, the highest number in the world.
Over the last two decades, America has had the highest or near-highest poverty rates for children, individual adults and families among 31 developed countries, according to the Luxembourg Income Study, a 23-year project that compares poverty and income data from 31 industrial nations.
So, while milestone days on Wall St. may be cause for joy and celebration for millions of Americans, many millions more are not sharing in that celebration, or that prosperity.
Sean M. Kennedy, Money Correspondent:
Money Matters, by Gather Correspondent Sean M. Kennedy, is published every Thursday to Gather Essentials: Money.
Money Matters is a practical look at money and how developments in the American economy may affect you.
Sean is a freelance writer based in Los Angeles.
Keep up with Sean’s other postings and Gather activity by joining his Gather network at skennedy.gather.com
You’ll find Sean and other Money Correspondents, plus celebrity content and plenty of other Money experts, at Money.gather.com