Wall Street vs. Main Street

How the American Economy Attempts a K-Shaped Recovery

Samuel Felice, Reporting Journalist

The stock market is witnessing record highs. While this is happening, millions of Americans have lost their jobs and are struggling to make ends meet. This may seem odd, but this has happened before. This is called a K-shaped recovery and can occur after a recession. A K-shaped recovery occurs when different industries of the economy recover at different rates. You also may be wondering why the letter k? This is because the two arms on a k represent the diverging paths of recovery rates for certain classes. 

This K-shaped recovery poses a real problem to the wellbeing of a large percentage of our nation. With the rise of the stock market, individuals who are invested, including many of the nation’s wealthiest men and women, are the primary individuals who earn profit. This can be summed up in the phrase the rich get richer. A study on the stock market shows that 52% of the stock market is owned by the nation’s top 1% of earners. Therefore, when the stock market rises, a small percentage of Americans are immediately and significantly benefited. As stated earlier, this does not affect individuals who are not invested to the same degree, and in consequence, such uninvested individuals, including many members of America’s working class, are affected insignificantly. 

Many of these people in the working class own little to no stock. While this phenomenon occurs on Wall Street, every day, more and more lower class American citizens are losing their jobs and possibly losing their homes due to the current economic downturn. A study done by Pew Research Center found that one in every four American adults has had trouble paying their bills since the start of COVID 19. A third of Americans have dipped into long term saving to help make ends meet. The study also shows that this is more common among people who lack a college education. According to the Bureau of Labor Statistics 12.6 million Americans are currently unemployed. This equates to approximately 7.9% of the American workforce. Although these numbers have dropped significantly since the beginning of the pandemic, this unemployment rate is still nothing to scoff at.

Among the people most affected by the economic downturn addressed above are those with little to no education and little experience in the workforce. As the holidays start to close in, many people may be struggling to buy presents or even put food on the table. Ultimately, this k shaped recovery has had both positive and negative effects on different segments of the American people, but the negative effects have affected a much larger percentage of the population. As Salesian gentlemen, we are called to help those in need. Whether it be collecting cans for a food drive or volunteering, now is the time in which people need us most. The k shaped recovery presents both pros and cons, and has changed many people’s lives whether it be for the better or worse.