U.S. labor share hits historic low as capital gains outpace wages
The labor share of income in the nonfarm business sector fell to its lowest level since 1947, reaching about 52.8%-52.9% in Q2 2026.
According to the latest BLS figures, the labor share of nonfarm business output fell to just 52.8%-52.9% in Q2 2026, the lowest point since the metric began in 1947. Goldman Sachs research estimates that roughly 40% of the 7.5-point drop since the 1990s stems from measurement quirks, including tax-driven reclassification of wages as pass-through profits, higher depreciation rates for fast-turnover capital, and the way equity compensation is recorded.
The remaining 60%, about 4.5 percentage points, is linked to genuine structural changes: rising markups by dominant firms, increased automation, and diminished worker bargaining power. These trends concentrate gains among the wealthiest households, who own most corporate equities, while average workers see a shrinking share of economic growth. The analysis suggests that continued AI-driven automation could push the labor share even lower, further widening the gap between capital owners and wage earners.
Why it matters
A falling labor share signals that most workers are receiving a smaller portion of economic growth, widening income inequality.
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