U.S. workers took home their smallest share of capital since at least 1947

Your compensation growth is significantly lagging behind corporate profit growth, potentially widening income inequality.

In the second quarter of 2026, U.S. workers received the smallest share of the nation's economic output since the Bureau of Labor Statistics began tracking data in 1947. This labor share, comprising wages and salaries, fell to 52.8%, down from 53.6% in the prior quarter and below the decade's average of 55.6%. This decline occurred despite record corporate earnings, which reached $2.1 trillion for Fortune 500 companies in 2025, and a 3.4% GDP growth in the third quarter of last year. Economists attribute this trend to the increasing shift towards capital and automation, which is potentially displacing workers and concentrating income. Job growth has also slowed, with only 584,000 jobs added in 2025 and a modest 29,000 added in September 2026. This divergence between booming corporate profits and weakening labor data raises concerns about jobless growth and a widening K-shaped economy.

The trend suggests a fundamental shift in how economic gains are distributed, favoring capital over labor. Automation, including AI, is a key driver, with projections that it could displace a substantial portion of work hours. While AI may eventually create new jobs, the immediate impact appears to be concentrating wealth and reducing the workforce's share of national income. This dynamic could lead to sustained wage stagnation for many, even as overall economic productivity increases.

Compounding this issue are immigration policies that have reduced the foreign-born workforce, inadvertently limiting job opportunities for domestic workers and potentially hindering business growth. The combination of automation and workforce reduction policies points to an economy where overall wealth may grow, but the benefits are not broadly shared, creating a more pronounced K-shaped economic recovery. Addressing this requires significant investment in worker retraining and potentially revised immigration strategies.