Workers Take Home Smallest Share of National Income Since 1947

Corporate profits are soaring while workers claim a shrinking slice of national income. Labor share—the portion of U.S. economic output flowing to wages—dropped to 52.8% in the second quarter of 2026, the lowest level since the Bureau of Labor Statistics began tracking it in 1947. This decline accompanies Fortune 500 profits hitting $2.1 trillion in 2025 and GDP growth of 3.4% in the third quarter, pointing to concentration of wealth rather than shared prosperity.

Automation and immigration are the primary culprits. Goldman Sachs analysts estimate AI could displace 25% of all work hours, with a 15% productivity increase potentially eliminating 6% to 7% of jobs. Simultaneously, an immigration crackdown has reduced the foreign-born workforce by 1.1 million to 1.4 million workers since January 2025. Labor participation rates have declined for both groups: foreign-born workers fell from 66.3% to 66% between September 2025 and September 2026, while native-born participation dropped from 61.6% to 60.9% over the same span. Unemployment reached 4.2%, with just 29,000 jobs created in September.

The response centers on worker retraining and workforce policy. Gen Z enrollment in vocational trade programs jumped 16% in 2024, reflecting recognition that technology-assisted skilled trades resist automation. About 72% of hiring managers surveyed plan to reskill existing employees. Economists contend that government has underinvested in workforce development programs that could match workers with available positions.