US workers' share of income falls to lowest level in 80 years

American workers received 54.1% of national income in early 2026, the smallest share since the federal government began tracking the data after World War II. That is down from more than 65% almost 80 years ago and from 57.7% in early 2020, a drop that helps explain why many households feel left behind even as headline growth and corporate profits remain strong.

The measure, known as the labor share of income, captures how much of the economy’s output flows to wages and salaries rather than to profits, dividends and other capital income. As that share shrinks, more of the gains from growth flow to shareholders and business owners instead of workers. In early 2026, workers also received 71.3% of corporate income, down from 77.8% at the start of 2020, another sign that a larger slice of business earnings is staying with capital.

The gap between output and pay has widened in the latest data. The Bureau of Labor Statistics said nonfarm business-sector labor productivity rose 4.9% in the third quarter of 2025, while real hourly compensation fell 0.2% in that same quarter. The bureau also said unit labor costs in the nonfarm business sector declined 1.9%, reinforcing the picture of firms gaining efficiency faster than pay is rising.

Federal Reserve researchers have said the labor share has fallen during the current expansion, and that real hourly compensation grew more slowly than worker productivity from the second quarter of 2020 through the first quarter of 2025. The St. Louis Fed has also linked weak sentiment to the fact that inflation has outpaced wage growth for many households, with some families relying on credit to cover expenses.

Economists have pointed to longer-running forces behind the decline, including the erosion of union membership and tax-law changes that have shifted more gains toward CEOs, investors and high-income Americans. The result is an economy where corporate earnings can climb while household budgets remain tight.

The strain is visible in the wider population as well. In 2022, 42% of U.S. households were classified as ALICE, meaning asset-limited, income-constrained but employed. For those workers, a stronger GDP does not necessarily translate into a bigger paycheck, a better cushion against higher prices or a greater share of the national income they help produce.