U.S. workers' share of national income falls to a new low
Add Axios as your preferred source to
see more of our stories on Google.
Amid the AI boom, labor's share of national income fell to a new low this year.
Why it matters: It's a barometer of who has the upper hand in the age-old tug-of-war between labor and capital.
Zoom in: The labor share tells you what percentage of the giant paycheck produced by the U.S. economy goes to workers in the form of wages and benefits, rather than to corporate profits, dividends, rents and interest paid to other economic actors, commonly summarized as "capital."
The big picture: After a brief moment during the pandemic when employers found themselves scrambling for workers, labor's bargaining position has worsened markedly in the half-decade since.
What they're saying: "We find that the rate of return on capital in the nonfinancial corporate sector through 1Q26 continues to run elevated compared to historical norms. And like the other measures we have looked at, it exhibits a level shift before and after the pandemic," JPMorgan U.S. economist Michael Feroli wrote in a note looking at the declining labor share and triangulating it with other metrics like the return on capital.
Between the lines: This economic backdrop — in which capital is doing much better than labor — might help explain why working Americans have increasingly sought out exposure to the stock market since the pandemic era, alongside innovations such as app-based, zero-commission trading, which have also helped boost trading.
What we're watching: Whether — or how much — the AI boom supercharges these fairly extreme readings.
- Some researchers, we recently noted, think that AI is already squeezing worker pay, as the same technology has pushed the stock market and corporate profits sharply higher.
