The stock market is going great guns. That’s supposed to be the good news for the New Year. It is indeed good news for a very small segment of the population, but not really for the rest of us. That’s because the median household income — which marks the point where half earn more and half earn less — in Washington fell between 2009 and 2013. The typical wage hovers around $20 an hour. Close to half a million kids in our state’s public schools are from families with incomes below $44,000 for a family of four or $36,000 for a family of three.
So what is the good news, if it isn’t the stock market? How about the 15 cent increase to our state’s minimum wage, from $9.32 to $9.47? That makes it catch up with inflation. Compare this to the federal minimum wage, which has been sitting at $7.25 since 2009. Some 16 years ago, Washington voters passed the first minimum wage to be adjusted each year to inflation. Following our lead, eight other states — Arizona, Colorado, Florida, Missouri, Montana, New Jersey, Ohio and Oregon — have now indexed their minimum wage to inflation.
But doesn’t this seem like peanuts compared to the stock market? On Dec. 18, the Dow Jones Industrial Average zoomed up 421 points, or 2.4 percent. Now, if you had $1,000 in the bank that might amount to $24. But if you had $1,000 in any bank, you were getting 0.01 percent interest: Ten cents a year, which is Bank of America’s checking account interest rate. If you had $10,000, you were in the same boat at the same bank, and you would have earned $1 a year for your money.
But if you had $100,000, you might have only had $25,000 in the bank, but $75,000 in stock in the 30 corporations that make up the Dow Jones. You would have earned 0.02 percent from the bank, or $5 a year. But you might have made $1,800 on Dec. 18 because of the increase in value of your Dow Jones stock.
Let’s pretend you had $1 million in the stock market. Then on Dec. 18 you would have made $24,000. If you had $10 million, you would’ve made $240,000. If you had $100 million, you would’ve made $2.4 million. And if you were Jeff Bezos, with a net worth of $29 billion, you would’ve made $696 million — in one day. Steve Ballmer, with a net worth of $22.7 billion, would have made $545 million. Bill Gates Jr., the wealthiest person in the world with a net worth of $81 billion, would have made $2 billion on this one day. That’s real money.
The stock market goes up and down each day. So what happened with the Dow Jones over the entire year? It went up 1,597 points or 9.7 percent. So for the year, while a worker with $1,000 in the bank “made” 10 cents, Bezos made $2.8 billion, Ballmer made $2.2 billion and Gates made $8 billion.
Let’s be clear about this money: It is the automatic effect of wealth creating more wealth. If you have money, you make money. One of the major milestones in the field of economics this year was the publication of Thomas Piketty’s book, “Capital in the Twenty-First Century.” Piketty’s research focuses on the inevitable accumulation of wealth as a result of unfettered capitalist development. This accumulation undermines the egalitarian impulse of our democracy. It creates more wealth, more privilege and more power. It is a zero-sum game that undermines advancement opportunities for the majority of people, who have seen their wages stagnate, household income fall and their kids’ schools go underfunded.
That’s why the increase in the minimum wage is so important. This year’s increase of 1.59 percent will directly benefit about 176,000 workers in our state. People you know will see a wage increase: Your neighbor, your teenage kid, the person who serves you coffee and donuts. Compare this to a 1.59 percent increase in Ballmer’s portfolio, which would give him a $400 million down payment to buy the Los Angeles Clippers. That may be good for Mr. Ballmer and for Los Angeles. But it can’t stand up to increasing the minimum wage for workers in our own state.