U.S. labor share falls to lowest level since 1947

Overview

Updated 1 hour ago

American workers took home 52.8% of the country's income in the second quarter of 2026, the smallest slice since the Bureau of Labor Statistics began tracking the figure in 1947. The previous quarter was 53.6%. This decade's average is about 55.6%.

Corporate profits hit a record $2.1 trillion for Fortune 500 companies in 2025, and GDP grew 3.4% in the third quarter of that year. The gap between those numbers and workers' pay is the mechanism: output is rising, but a larger share of it is going to capital rather than wages.

Why it matters

If the trend holds, a growing economy stops translating into rising paychecks for most workers.

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Key Indicators

52.8%

Labor share of U.S. income, Q2 2026

The portion of economic output paid to workers as wages and salaries, the lowest since records began in 1947.

$2.1T

Fortune 500 profits, 2025

Record corporate earnings reported for 2025.

4.2%

Unemployment rate, September 2026

Up from earlier in the year as hiring slowed.

584,000

Jobs added in 2025

Down from about 2 million added in 2024.

55.6%

Decade average labor share

The 2020s average, roughly three points above the current reading.

Voices

Curated perspectives — historical figures and your fellow readers.

People Involved

Raymond Robertson

Labor economist, Texas A&M Bush School of Government

Active; commenting on the labor share decline

Mark Regets

Senior fellow, National Foundation for American Policy

Active; commenting on immigration and the workforce

Joseph Briggs

Analyst, Goldman Sachs

Active

Sarah Dong

Analyst, Goldman Sachs

Active

Michael Feroli

U.S. economist, JPMorgan

Active

Organizations Involved

U.S. Bureau of Labor Statistics (BLS)

Federal statistical agency

Publishes the labor share and productivity data at the center of the story

The Labor Department agency that produces the productivity and costs report containing the labor share figure.

Goldman Sachs

Investment bank

Published estimates on AI's effect on work hours and jobs

Wall Street bank whose analysts estimated AI could displace a quarter of work hours.

National Foundation for American Policy

Research organization

Published data on the shrinking foreign-born workforce

Research group that tracks immigration and the U.S. labor force.

JPMorgan Chase

Investment bank

Analyzed returns on capital alongside the labor share

Bank whose economists compared returns on capital with the falling labor share.

Timeline

January 2026 October 2026

3 events Latest: Yesterday

October 2026
Labor share falls to 52.8% in second quarter
Latest Data release

BLS data reported by Fortune show labor share at 52.8% for Q2 2026, the lowest since 1947, down from 53.6% the prior quarter.
Yesterday
August 2026
Axios ties new low to AI boom
Analysis

Axios reports labor's share of national income fell to a new low, citing JPMorgan's Michael Feroli on elevated returns on capital.
August 6th, 2026
January 2026
Labor share hits record low for late 2025
Data release

Bloomberg reports the labor share of GDP fell to its lowest level in data going back to 1947 for the third quarter of 2025.
January 9th, 2026

Scenarios

Labor share falls again in the next BLS report

Possible Resolves by Q1 2027

Discussed by: Raymond Robertson and other labor economists quoted in Fortune

Automation and weak hiring keep pushing income toward capital. If the next quarterly productivity and costs report shows a labor share below 52.8%, the record-low trend continues.

Labor share stabilizes above 53%

Unlikely Resolves by Q2 2027

Discussed by: Morgan Stanley economists, who have called the productivity surge an open question

If the productivity gains prove cyclical rather than AI-driven, or if tighter labor markets push wages up, the labor share could recover. A reading at or above 53% would mark a break in the decline.

Unemployment rises above 5% as hiring stalls

Possible Resolves by Jan 31, 2027

Discussed by: Mark Regets and Raymond Robertson, both of whom expect continued workforce weakness

Job growth has slowed sharply, and Regets warns a shrinking labor force makes sustained growth harder. If unemployment crosses 5%, the jobless-growth pattern becomes harder to dismiss as noise.

Historical Context

3 moments from history that rhyme with this story — and how they unfolded.

2001-2003

Jobless recovery of the early 2000s (2001-2003)

The U.S. economy emerged from the 2001 recession with GDP growing again, but payrolls lagged for months. Productivity rose while hiring stayed weak, a pattern economists labeled the jobless recovery.

Then

The Federal Reserve kept interest rates low to support hiring.

Now

The episode established that output growth and employment growth can diverge for extended periods.

Why this matters now

The current data show the same split: GDP and profits rising while job creation slows and labor's share of income falls.

1979-2010

Decline of U.S. manufacturing employment (1979-2010)

Factory output kept rising for years while manufacturing payrolls fell, as automation and offshoring replaced production workers. The losses concentrated in regions that depended on manufacturing.

Then

Displaced workers moved into lower-paying service jobs or left the workforce.

Now

The shift contributed to wage stagnation and regional economic decline.

Why this matters now

It is the clearest precedent for productivity gains accruing to capital while the workers who remain see a smaller share of the income.

1811-1816

Industrial Revolution and the Luddite protests (1811-1816)

Textile machinery displaced skilled artisans in England. Organized workers destroyed machines in protest, arguing the equipment was eliminating their livelihoods.

Then

The British government deployed troops and prosecuted the protesters.

Now

Industrial employment eventually expanded, but the transition took decades and imposed heavy costs on the displaced generation.

Why this matters now

It is the earliest large-scale case of automation shifting income from labor to capital, and a reminder that the adjustment can outlast the workers it displaces.