S&P 500 Rallying 206% Beats Wage Growth by Most in Five Decades

Bloomberg Business reports:

Being an American worker with no stake in the equity market has, by one measure at least, seldom been costlier.

Even though wages are improving, the rate of growth in what companies pay employees pales in comparison to what stocks have handed investors over the last six years. In fact, with equities rising 20 percent annually and wages up 2 percent, the gap has never been wider in any bull market since 1966.

While comparing salary and stock returns has its imperfections, the figures are revealing in a country where six years of cost cuts helped double the Standard & Poor’s 500’s earnings and add $12 trillion to shares. The divergence is a concern when Federal Reserve data show the percentage of families owning stock fell to 48.8 percent in 2013 from 53.2 percent in 2007.

“Earnings have been so strong in part because wage growth has been so weak,” said Mark Zandi, chief economist at Moody’s Analytics Inc. in Philadelphia. “The benefit of any productivity growth is going right to corporate earnings and to shareholders.”

Can you say bubbly?