- Stock market gains over the past six months have allowed America’s wealthiest to get even richer, while at the same time a growing number of Americans struggle with basic necessities like food and shelter.
- Elon Musk alone made over $67 billion during the first six months of the pandemic.
- The ultrawealthy’s profits and the resilience of professional workers indicate that America is experiencing a “K-shaped” recovery from the pandemic-induced recession, where low-wage and blue-collar workers are left behind.
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The coronavirus pandemic and the subsequent economic shutdown altered millions of Americans’ financial futures — but not always for the worst.
In the six months between when the coronavirus shutdowns began on March 18 and September 15, American billionaires have become 29% richer than they were before the pandemic crippled the American economy in March, according to research from think-tank the Institute for Policy Studies (IPS).
Elon Musk alone made over $67.4 billion during that period, growing his net worth by 273.8%, according to IPS. Mark Zuckerberg’s fortune grew by $49.9 billion (an increase of 83.9%) between March and September, while Jeff Bezos profited so much that in August he briefly became the first person in history with a personal net worth over $200 billion, per IPS.
Things have been quite different for the average American, however
Though the total number of unemployed Americans has fallen from its April peak, the national unemployment rate is still 8.4%, Business Insider’s Carmen Reinicke reported on September 4. At the same time, 29 million adults reported their households sometimes or often didn’t have enough to eat in the past week, 15 million renters are falling behind on their payments, and a growing share of furloughed workers fear they may never get their jobs back.
“One way to think about the current economy is that two trends are soaring pretty solidly upward,” economist Dr. Jared Bernstein during a virtual press conference on New York State’s wealth tax debate September 10, “one is the stock market, and one is hunger.”
Many of the largest net worth gains by billionaires are closely tied to their company's performance on the stock market, which has hit record highs despite the turmoil in the rest of the economy since an initial drop in February. The spike in Musk's net worth, for example, was driven almost entirely by a spike in Tesla's share price, which then unlocked various parts of his complex compensation package.
Economists fear that billionaires' recent success indicates that while businesses in the technology and retail sectors are rebounding, many businesses that once employed low wage workers in travel, entertainment, and food services might not.
"This is a K-shaped recovery, meaning that it is being experienced very differently by those at the top and those at the middle and the bottom," Bernstein said. "The finance sector is currently reaping windfalls."
A number of things have been proposed to help equalize the recovery, from further federal stimulus to stricter social distancing measures. An increasing number of economists, like Bernstein and Elizabeth Warren advisor Dr. Emmanuel Saez, as well as politicians and activists are taking aim at the rich, calling for a wealth tax that could help cover budget shortfalls caused by the coronavirus in states like New York.
But opponents say a wealth tax would be too difficult to enforce and could never be implemented in time, Business Insider previously reported.
"The rich have by and large kept their income and are now piling up wealth because the crisis limits their spending opportunities," Saez said the event, "and also because the stock market has pretty much already recovered."