Corporate Profits Are Soaring. At The Same Time, Workers Hit Their Lowest Share of National Income Ever Recorded.
A growing number of Americans say they feel financially worse off despite a strong job market. New research suggests that the cause could be the fact that workers are receiving the smallest share of the nation’s income since the government began tracking the data nearly eight decades ago.
The report, conducted by the Federal Reserve Bank of New York, found that U.S. workers received just 54.1% of national income in early 2026, the lowest level recorded since the data series began in 1947.
The figure, known as the “labor share of income,” measures how much of the country’s economic output is paid to employees compared with the portion that flows to businesses, shareholders, and investors through capital income.
Following World War II, labor’s share of national income exceeded 65%. Even before the COVID-19 pandemic, the figure stood at 57.7%. Since then, it has continued to shrink despite strong economic growth and historically low unemployment.
According to a recent survey by the New York Federal Reserve, 48% of Americans said their financial situation was worse in May than it had been a year earlier, the highest percentage since January 2023. Meanwhile, a CBS News poll found that three out of four Americans believe their income is failing to keep pace with inflation, while only 29% described the economy as being in good shape.
Economists say the disconnect stems from how the benefits of economic growth are being distributed. “You’ve got a lot of people who seem to work for firms that, in the aggregate, seem to be doing really well,” Josh Bivens, chief economist at the Economic Policy Institute, told the outlet. “They’re very profitable, and yet workers’ wages aren’t growing particularly fast relative to how fast the firms are growing.”
He added that many employees spend years working without seeing meaningful improvements in their financial position, even as their employers report record profits. Workers received 71.3% of corporate income during the first quarter of 2026, down from 77.8% at the beginning of 2020 and 79.1% in 1979. The remaining share has increasingly gone to shareholders through stock buybacks, dividends, and executive compensation.
Researchers point to several long-term forces behind the decline in labor’s share of income.
Union membership has steadily fallen over the past four decades. According to the Center for Economic and Policy Research, only about 10% of U.S. workers belonged to unions last year, compared with roughly 20% in 1983.
Economists also cite decades of policy changes that weakened collective bargaining and increased the share of income flowing to investors. The federal minimum wage has remained unchanged at $7.25 an hour since 2009. Adjusted for inflation, economists note that its purchasing power is near its lowest point in roughly 50 years.
The result, Hanks argues, is a cycle that becomes increasingly difficult to reverse. As workers receive a smaller portion of economic growth, they lose bargaining power to negotiate higher wages and improved working conditions, while corporations and investors gain greater leverage over compensation.
Other financial pressures have compounded those concerns. Inflation accelerated again this year, reaching its highest level in more than three years and eroding purchasing power. Gallup recently found that higher gasoline prices are creating financial hardship for about two-thirds of American households.
Record levels of credit card and auto loan debt suggest many households are increasingly relying on borrowing simply to cover everyday expenses. Adding to those anxieties are concerns about automation and artificial intelligence, with many workers fearing that technological advances could threaten future job security.
