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Friends,
How can the stock market be rising to record levels while jobs and wages are going nowhere, most Americans are paying higher prices for just about everything, and consumer sentiment is in the dumps?
Answer: Stock prices reflect corporate profits, which have risen to record levels. And corporate profits are soaring for two big reasons:
1. Corporations have more monopoly power than ever. This means they can raise prices without worrying that competitors will grab away consumers by underpricing them.
This is also a reason why wages are going nowhere. Workers have fewer competing companies to work for. Plus, more corporations are requiring their workers to sign so-called “noncompete agreements” so they can’t work for a competitor even if they found one. Researchers estimate that 38 percent of workers are now subject to such noncompete agreements at some point — not just for white-collar but increasingly for blue-collar jobs.
2. Corporations are using artificial intelligence (AI) — and the anticipation of AI — to slash jobs and wages.
Wages are around two-thirds of the typical corporation’s total costs. So a key way to increase profits is to cut total payroll costs by reducing the number of workers and keeping down the pay of those who remain.
AI is rapidly becoming central to this. Regardless of whether AI can substitute for all these jobs, corporations are behaving as if it can — and Wall Street is rewarding corporations that are slashing jobs in anticipation of AI.
The U.S. job market is already experiencing a wave of mass layoffs. So far, in the first four months of 2026, big corporations have cut over 128,000 jobs.
Meta is laying off 8,000 employees as it shifts toward AI. Meta’s shares have risen briskly since the start of the year. Amazon has cut 30,000 jobs, many of them replaced by AI, while racking up record profits. The six biggest Wall Street banks are cutting 15,000 jobs and showing profits 18 percent higher than last year’s. They’re crediting AI.
Oracle is cutting thousands of jobs and gaining over $6 billion in profits as part of its AI push. Its expected layoffs could total 20,000 to 30,000. UPS is planning to cut up to 30,000 jobs this year. Dow, the chemical maker, has announced cuts of about 4,500 jobs, leveraging AI and automation. Block, Inc. (Square/Cash App) is cutting nearly 40 percent of its workforce, or roughly 4,000 jobs, in an AI-driven restructuring.
So, the answer to how the stock market can be rising to record levels — when jobs and wages are going nowhere and most Americans are paying more for goods and services — is that it’s hitting records because jobs and wages are going nowhere, and most people are paying more for goods and services.
Monopoly power (including noncompete clauses) and AI are creating one of the largest redistributions in history — from workers to the owners of capital (top executives and investors).
Meanwhile — and for much the same reason — consumer sentiment hit a record low in April, dragged down by worries about the Iran war, gas prices, and job risks from AI. Today’s perception of the economy is darker than during any previous crisis since the University of Michigan started tracking sentiment more than 50 years ago,
3. A final crucial point: Wealthier Americans keep spending (the richest 10 percent now account for almost half of all spending; three decades ago, they accounted for 36 percent), while most everyone else is strapped. The people really taking it on the chin are the bottom half. Not only are they losing jobs and wages but the Trump regime is cutting the federal assistance they rely on.
Because of Trump and congressional Republicans’ refusal to extend subsidies under the Affordable Care Act, ACA enrollments are declining about 20 percent — from 24 million people who were covered last year to around 19 million now. Larger losses are forecast by the end of the year.
In addition, Trump’s work requirements for Medicaid are making it harder for many of the nation’s low-income people to qualify because they can’t get work.
More Americans are losing food assistance under SNAP. And the Trump regime’s proposed rule to impose harsh work requirements and time limits on people receiving rental assistance will put an estimated 3.7 million people — more than half of them children — at risk of losing housing.
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How should Democrats respond to all this? At least, pledge to:
(1) Break up monopolies through major antitrust enforcement.
(2) Regulate AI so corporations using it cannot engage in mass layoffs, but are only permitted to downsize by a small percentage (3 percent?) of their workforce per year.
(3) Establish Medicare for all.
(4) Institute a Universal Basic Income financed by higher taxes on those at the top, so all families have at least a subsistence wage.
Will Trump take these steps? Of course not. Will Democrats demand them and pledge to take these steps if elected? I hope so.
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