Labor Share of Income Hits 1947 Low in 2026

The portion of national income paid to workers has fallen to 52.8 percent amid rising corporate profits.

Updated on Oct. 27, 2026 in Employment

Isometric editorial illustration showing a large industrial cargo crane lifting a single steel shipping container against a plain, flat background. — The U.S. labor share of income fell to a record low of 52.8 percent in 2026, as corporate profit margins continued to outpace wage growth. AI Illustration. Upload story photo >

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In 2026, the U.S. labor share of income declined to 52.8 percent, the lowest level recorded since data collection began in 1947. This shift reflects a sustained increase in corporate profit margins over the same period.

Why it matters

The falling labor share highlights how modern economic growth is increasingly favoring capital over workers due to automation and reduced bargaining power. This trend impacts household income levels as a larger portion of output accrues to business owners rather than employees.

Labor share of income fell to 52.8 percent, a significant drop from levels seen in the early 2000s. The decline is attributed 60 percent to market concentration and labor trends, and 40 percent to tax law changes regarding depreciation and pass-through entities.

The players

Federal Reserve

The central banking system of the United States that manages monetary policy and recently raised interest rates for the first time in three years.

The details

Factors contributing to this decline include the rise of industry concentration, increased automation, and reduced bargaining power for labor. Additionally, companies have shifted organizational structures to utilize pass-through entities, effectively recharacterizing wages as profits.

1947 marks the beginning of BLS record keeping for the labor share of income.
The 1990s marked the start of the current decline in the labor share.
The labor share of income was near 62 percent during the early 2000s.
In 2026, the labor share of income dropped to 52.8 percent.
Projections suggest the labor share could fall below 50 percent by 2030.

Macro View

The current trajectory mirrors long-standing shifts in the economy that have diverged from the mid-20th-century stability captured in the historical BLS data series for labor share of income. This decline marks a departure from post-WWII patterns as corporate capital captures a larger share of net income.

The decline in the labor share of income can impact a household's monthly budget, with estimates suggesting that returning to a 62 percent share could represent a significant increase in potential per-household income. These trends underscore how broader economic shifts directly correlate to the stagnant wage growth many workers experience.

The takeaway

Workers may need to account for a sustained shift in how corporate profits are distributed as automation continues to influence output. Focusing on long-term skill acquisition in sectors less prone to automation may help mitigate the impacts of these broader economic changes.