"In the third quarter of 2025, the share of gross domestic income going to employees' wages and benefits fell to 51.4%, down from 58% in 1980, according to U.S. Commerce Department data, as noted by The Wall Street Journal's chief economics commentator, Greg Ip. Over the same period, corporate profits, or the leftover cash used to grow a business or pay owners, have been on the rise, reaching nearly 12% of the share of gross domestic income in the third quarter, up from 6%."
"Axios ran these numbers, and calculated the decline in wages as a share of gross domestic income adding up to $12,000; as in, that's how much less per year the average American is bringing home as a result of this dynamic. It totals some $2 trillion in annual compensation for working Americans. That would mean a nearly 20% pay boost in the annual median income."
""There's no question that contributed to inequality and kind of the stagnation of median earnings," Harry J. Holzer, a labor economist at Georgetown University, told Fortune. He attributes part of this shift to the weakening of worker political power. "[It's a] combination of automation and globalization benefiting the owners of capital more than workers and the decline in these sort of equalizing institutions like collective bargaining.""
Labor's share of gross domestic income fell to 51.4% in Q3 2025, down from 58% in 1980. Corporate profits rose to nearly 12% of gross domestic income in Q3, up from 6% in 1980. The decline in labor's share translates to roughly $12,000 less per year for the average American, totaling about $2 trillion in annual compensation loss for workers. That gap equates to nearly a 20% boost to median income if reversed. Economists attribute the shift to automation, globalization, and weakening worker political power and collective bargaining. A CBO report shows the top 1% doubled their share between 1979 and 2022.
Read at Fortune
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