American workers are getting a smaller share of what the economy produces than at almost any point in history. Wages and salaries made up 42.8% of gross domestic income in 2024, the most recent full year of data, according to Bureau of Economic Analysis figures, the lowest share since the series began in 1929.
A broader measure shows the same trend. The Bureau of Labor Statistics reported on August 6 that labor’s share of nonfarm business output, which includes benefits such as health insurance and retirement contributions, fell to 52.9% in the second quarter of 2026, the lowest level since that series began in 1947. Real hourly compensation fell 3.1% at an annual rate during the quarter even as productivity kept climbing.
Corporate profits from current production show the mirror image, reaching $4.43 trillion at a seasonally adjusted annual rate in the first quarter of 2026, an all-time high in Bureau of Economic Analysis data going back to 1947, and up from $3.92 trillion a year earlier.
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Since 1979, a typical worker’s pay has grown by about a third, even as productivity has grown nearly three times as fast, according to Economic Policy Institute data. Before 1979, the two measures moved roughly in step.
Labor’s share stayed remarkably stable for most of the post-war period before entering a sustained decline in the early 2000s. Researchers have proposed several long-run culprits for that trend, among them technological change, the growing dominance of “superstar” firms, and rising markups charged by companies with market power.
Economists at the New York Fed found in June that the same within-industry dynamics, pay shrinking inside existing industries rather than the economy shifting toward lower-paying ones, drove both the post-pandemic decline and labor’s share drop in the two recessions before it.
Its trajectory so far actually resembles an older pattern, from recessions before 2000, when labor’s share eventually recovered later in the expansion. Whether that will happen again this time is unclear. “We would need a longer expansion to see the labor share rise again,” the researchers wrote.
