Commentary: Why are workers feeling so stressed? Maybe because labor’s share of the economy is at a record low

There was a brief moment at the tail end of the pandemic, already forgotten, at which it seemed that American workers had finally grasped the reins of power, with wage gains rising and organizing strength entering a new era.

The moment is forgotten today because whatever leverage labor thought it had acquired evaporated rapidly. And recently it has been scraping along the bottom.

Just this month, the government reported that labor share—”the fraction of economic output that accrues to workers,” as the Bureau of Labor Statistics defines it—reached 52.8% in the second quarter of this year. That’s the lowest level the BLS has recorded since it started taking the measurement, in 1947.

The labor share is a symptom of worker anxiety, of course, not the cause. But as a symptom it speaks volumes. It reflects growing wealth inequality, a tax system that comes down hard on wages but gives capital earnings a pass, an explosive growth in corporate profits and a shift of employment from large-scale manufacturing to gig-provided services.

Juxtaposing the labor share with corporate profits tells the full story: Since the first quarter of 2001, according to the BLS and the Bureau of Economic Analysis, after-tax corporate profits have risen nearly eight-fold while the labor share has declined by nearly 18%.

Labor share can be defined in many different ways, economists point out. But most agree that however it’s defined, its shrinkage is unmistakable. Through almost the entirety of the postwar period, up to the turn of the last century, the labor share hovered between about 62% and 65%, or roughly two-thirds of economic output.

It remained stable, observed economist Roc Armenter of the Federal Reserve Bank of Philadelphia in a 2015 paper, “through expansions, recessions, high and low inflation, and the long transition from an economy primarily based on manufacturing to one mainly centered on services.”

Indeed, that stability dated back to the prewar period, prompting economist John Maynard Keynes to describe it in 1936 as “a bit of a miracle.” Keynes’ quip has been turned on its head in recent years—Armenter titled his paper “A Bit of a Miracle No More.”

The labor share is often a useful indicator of the economic condition of the working class. The BLS reports that the percentage declined sharply during and after the 2001 and 2007-2009 recessions, but rose to nearly 59% in 2020, when the pandemic suppressed corporate profits and government assistance for workers spiked. After that, however, it resumed an almost unbroken trend downward.

The downdraft has picked up the pace. After rising to a recent peak of 55.3% in the first quarter of 2025, the metric fell in every subsequent quarter. Things have only gotten worse for workers since the beginning of this year, due in part to inflation triggered by President Trump’s tariffs and spending on his war with Iran.

Hourly wages in the private non-farm sector increased in August by 10 cents, or 0.3%, over the previous month, and gained 3.1% on the year, according to the BLS. But those gains disappeared into the maw of inflation, which rose by 0.4% in August and by 3.4% since Jan. 1. If workers feel that they’re moving backwards, in other words, it’s not their imagination.

The new era of worker power that labor advocates proclaimed as the pandemic ebbed was something of a chimera. They based their optimism on a surge of successful union organizing drives at Starbucks stores, a hint of union interest at Amazon warehouses and higher minimum wages in cities and states across the country. Workers experienced a wave of mobility as demand outpaced labor supply.

“The labor market is experiencing a Great Upgrade,” the progressive Roosevelt Institute declared. The euphoria continued into 2022. “We’re in a moment where, politically, workers are ascendant,” David Madland of the Center for American Progress, a liberal think tank, told the investment publication Barron’s in May that year. (The article’s headline read: “How Workers Gained an Edge — and Why They Won’t Lose It Soon.”)

Some labor economists were less sanguine. Even the advances up to then still left miles to travel before the American working class recovered all the economic standing it had lost since the 1970s, observed Teresa Ghilarducci of the New School.

“A lot of the talk about labor having power is based on organizing efforts at Starbucks and Amazon,” Ghilarducci told me in 2022. Of 11 economic indicators she examined, she said, “most indicators show either declining labor power or give mixed signals.”

This was a period in which policy-makers were committed to an economic doctrine that saw employment and inflation moving in lockstep—that the only way to bring down inflation was to increase unemployment. That was a disquieting pointer to Federal Reserve Board policy, for the central bank counted controlling inflation, not enduring full employment, as one of its mandates.

Then-Fed Chairman Jerome H. Powell explicitly stated that unemployment had to rise for inflation to come down. “The labor market has remained extremely tight,” Powell said at a September 2022 news conference to explain the Fed’s decision to raise interest rates by three-quarters of a percentage point for the third time in a row.

As evidence for the tight labor market, Powell cited “the unemployment rate near a 50-year low, job vacancies near historical highs, and wage growth elevated … with demand for workers substantially exceeding the supply of available workers.” He concluded, with evident regret, “So far, there’s only modest evidence that the labor market is cooling off.”

Labor share isn’t universally favored as an economic indicator. That’s because it can be hard to distinguish labor income from investment income, especially as more workers become proprietors of their own businesses—do the earnings of Uber or Lyft drivers count as labor income, or the product of their investments in their car, their gas, their insurance and all the other spending they incur before accepting their passenger?

Wage income, moreover, isn’t just a key to middle- or working-class economics. The pattern has been skewed by higher incomes collected by those in the higher echelons of wage workers, like corporate chief executives, entertainers and professional athletes. By convention, much of their income gets counted in the labor share.

“It’s true that the typical worker has seen their share of the pie fall,” observed liberal economist Dean Baker of the Center for Economic and Policy Research, “but this is mostly from upward redistribution within the wage distribution. A much larger share of wage income is going to high-end earners, such as CEOS and other top execs, Wall Street types, well-situated STEM workers and protected professionals like doctors and dentists.”

Other liberal economists disdain labor share as a useful metric, or see it as a distraction from sober policy analysis. What’s important, wrote Jared Bernstein, the former top economic adviser to President Biden, is pushing for full employment, because that’s what gives workers the ability to fight the accumulation of political power in the hands of the 1%, or even the 0.1%.

“Social and economic justice,” Bernstein wrote in May, “remain a struggle for the political power that creates the opportunity for a fairer distribution of our economy’s prodigious wealth, income, and most importantly, opportunity.”

That’s amounts to a fight against the so-called K-shaped economy, in which the rich thrive and everyone else struggles.

“Since 2023, wealth has increased the most for high-income households, while inflation has risen the most for low-income households, with both factors helping explain the fact that real retail spending rose the most for high-income households,” wrote researchers at the New York Federal Reserve Bank this spring.

We shouldn’t let the debate about how to measure the labor share divert us from keeping our eye on the economic ball. It’s a signpost to the uneven distribution of income and wealth in America, but not the only one. Worker power has been declining since the pandemic. That trend has accelerated since the Trump administration has eviscerated agencies tasked with protecting worker rights such as the Department of Labor and the National Labor Relations Board, gifted wealthier wage-earners and investors with tax cuts and imposed an inflation tax on ordinary Americans.

Nor should we ignore labor share, however. In its raw form, it’s a measure of political power, and what it shows is that workers are losing and corporate interests are winning the battle. That’s what should concern us.

There was a brief moment at the tail end of the pandemic, already forgotten, at which it seemed that American workers had finally grasped the reins of power, with wage gains rising and organizing strength entering a new era.

The moment is forgotten today because whatever leverage labor thought it had acquired evaporated rapidly. And recently it has been scraping along the bottom.

Just this month, the government reported that labor share—”the fraction of economic output that accrues to workers,” as the Bureau of Labor Statistics defines it—reached 52.8% in the second quarter of this year. That’s the lowest level the BLS has recorded since it started taking the measurement, in 1947.

The labor share is a symptom of worker anxiety, of course, not the cause. But as a symptom it speaks volumes. It reflects growing wealth inequality, a tax system that comes down hard on wages but gives capital earnings a pass, an explosive growth in corporate profits and a shift of employment from large-scale manufacturing to gig-provided services.

Juxtaposing the labor share with corporate profits tells the full story: Since the first quarter of 2001, according to the BLS and the Bureau of Economic Analysis, after-tax corporate profits have risen nearly eight-fold while the labor share has declined by nearly 18%.

Labor share can be defined in many different ways, economists point out. But most agree that however it’s defined, its shrinkage is unmistakable. Through almost the entirety of the postwar period, up to the turn of the last century, the labor share hovered between about 62% and 65%, or roughly two-thirds of economic output.

It remained stable, observed economist Roc Armenter of the Federal Reserve Bank of Philadelphia in a 2015 paper, “through expansions, recessions, high and low inflation, and the long transition from an economy primarily based on manufacturing to one mainly centered on services.”

Indeed, that stability dated back to the prewar period, prompting economist John Maynard Keynes to describe it in 1936 as “a bit of a miracle.” Keynes’ quip has been turned on its head in recent years—Armenter titled his paper “A Bit of a Miracle No More.”

The labor share is often a useful indicator of the economic condition of the working class. The BLS reports that the percentage declined sharply during and after the 2001 and 2007-2009 recessions, but rose to nearly 59% in 2020, when the pandemic suppressed corporate profits and government assistance for workers spiked. After that, however, it resumed an almost unbroken trend downward.

The downdraft has picked up the pace. After rising to a recent peak of 55.3% in the first quarter of 2025, the metric fell in every subsequent quarter. Things have only gotten worse for workers since the beginning of this year, due in part to inflation triggered by President Trump’s tariffs and spending on his war with Iran.

Hourly wages in the private non-farm sector increased in August by 10 cents, or 0.3%, over the previous month, and gained 3.1% on the year, according to the BLS. But those gains disappeared into the maw of inflation, which rose by 0.4% in August and by 3.4% since Jan. 1. If workers feel that they’re moving backwards, in other words, it’s not their imagination.

The new era of worker power that labor advocates proclaimed as the pandemic ebbed was something of a chimera. They based their optimism on a surge of successful union organizing drives at Starbucks stores, a hint of union interest at Amazon warehouses and higher minimum wages in cities and states across the country. Workers experienced a wave of mobility as demand outpaced labor supply.

“The labor market is experiencing a Great Upgrade,” the progressive Roosevelt Institute declared. The euphoria continued into 2022. “We’re in a moment where, politically, workers are ascendant,” David Madland of the Center for American Progress, a liberal think tank, told the investment publication Barron’s in May that year. (The article’s headline read: “How Workers Gained an Edge — and Why They Won’t Lose It Soon.”)

Some labor economists were less sanguine. Even the advances up to then still left miles to travel before the American working class recovered all the economic standing it had lost since the 1970s, observed Teresa Ghilarducci of the New School.

“A lot of the talk about labor having power is based on organizing efforts at Starbucks and Amazon,” Ghilarducci told me in 2022. Of 11 economic indicators she examined, she said, “most indicators show either declining labor power or give mixed signals.”

This was a period in which policy-makers were committed to an economic doctrine that saw employment and inflation moving in lockstep—that the only way to bring down inflation was to increase unemployment. That was a disquieting pointer to Federal Reserve Board policy, for the central bank counted controlling inflation, not enduring full employment, as one of its mandates.

Then-Fed Chairman Jerome H. Powell explicitly stated that unemployment had to rise for inflation to come down. “The labor market has remained extremely tight,” Powell said at a September 2022 news conference to explain the Fed’s decision to raise interest rates by three-quarters of a percentage point for the third time in a row.

As evidence for the tight labor market, Powell cited “the unemployment rate near a 50-year low, job vacancies near historical highs, and wage growth elevated … with demand for workers substantially exceeding the supply of available workers.” He concluded, with evident regret, “So far, there’s only modest evidence that the labor market is cooling off.”

Labor share isn’t universally favored as an economic indicator. That’s because it can be hard to distinguish labor income from investment income, especially as more workers become proprietors of their own businesses—do the earnings of Uber or Lyft drivers count as labor income, or the product of their investments in their car, their gas, their insurance and all the other spending they incur before accepting their passenger?

Wage income, moreover, isn’t just a key to middle- or working-class economics. The pattern has been skewed by higher incomes collected by those in the higher echelons of wage workers, like corporate chief executives, entertainers and professional athletes. By convention, much of their income gets counted in the labor share.

“It’s true that the typical worker has seen their share of the pie fall,” observed liberal economist Dean Baker of the Center for Economic and Policy Research, “but this is mostly from upward redistribution within the wage distribution. A much larger share of wage income is going to high-end earners, such as CEOS and other top execs, Wall Street types, well-situated STEM workers and protected professionals like doctors and dentists.”

Other liberal economists disdain labor share as a useful metric, or see it as a distraction from sober policy analysis. What’s important, wrote Jared Bernstein, the former top economic adviser to President Biden, is pushing for full employment, because that’s what gives workers the ability to fight the accumulation of political power in the hands of the 1%, or even the 0.1%.

“Social and economic justice,” Bernstein wrote in May, “remain a struggle for the political power that creates the opportunity for a fairer distribution of our economy’s prodigious wealth, income, and most importantly, opportunity.”

That’s amounts to a fight against the so-called K-shaped economy, in which the rich thrive and everyone else struggles.

“Since 2023, wealth has increased the most for high-income households, while inflation has risen the most for low-income households, with both factors helping explain the fact that real retail spending rose the most for high-income households,” wrote researchers at the New York Federal Reserve Bank this spring.

We shouldn’t let the debate about how to measure the labor share divert us from keeping our eye on the economic ball. It’s a signpost to the uneven distribution of income and wealth in America, but not the only one. Worker power has been declining since the pandemic. That trend has accelerated since the Trump administration has eviscerated agencies tasked with protecting worker rights such as the Department of Labor and the National Labor Relations Board, gifted wealthier wage-earners and investors with tax cuts and imposed an inflation tax on ordinary Americans.

Nor should we ignore labor share, however. In its raw form, it’s a measure of political power, and what it shows is that workers are losing and corporate interests are winning the battle. That’s what should concern us.

There was a brief moment at the tail end of the pandemic, already forgotten, at which it seemed that American workers had finally grasped the reins of power, with wage gains rising and organizing strength entering a new era.

The moment is forgotten today because whatever leverage labor thought it had acquired evaporated rapidly. And recently it has been scraping along the bottom.

Just this month, the government reported that labor share—”the fraction of economic output that accrues to workers,” as the Bureau of Labor Statistics defines it—reached 52.8% in the second quarter of this year. That’s the lowest level the BLS has recorded since it started taking the measurement, in 1947.

The labor share is a symptom of worker anxiety, of course, not the cause. But as a symptom it speaks volumes. It reflects growing wealth inequality, a tax system that comes down hard on wages but gives capital earnings a pass, an explosive growth in corporate profits and a shift of employment from large-scale manufacturing to gig-provided services.

Juxtaposing the labor share with corporate profits tells the full story: Since the first quarter of 2001, according to the BLS and the Bureau of Economic Analysis, after-tax corporate profits have risen nearly eight-fold while the labor share has declined by nearly 18%.

Labor share can be defined in many different ways, economists point out. But most agree that however it’s defined, its shrinkage is unmistakable. Through almost the entirety of the postwar period, up to the turn of the last century, the labor share hovered between about 62% and 65%, or roughly two-thirds of economic output.

It remained stable, observed economist Roc Armenter of the Federal Reserve Bank of Philadelphia in a 2015 paper, “through expansions, recessions, high and low inflation, and the long transition from an economy primarily based on manufacturing to one mainly centered on services.”

Indeed, that stability dated back to the prewar period, prompting economist John Maynard Keynes to describe it in 1936 as “a bit of a miracle.” Keynes’ quip has been turned on its head in recent years—Armenter titled his paper “A Bit of a Miracle No More.”

The labor share is often a useful indicator of the economic condition of the working class. The BLS reports that the percentage declined sharply during and after the 2001 and 2007-2009 recessions, but rose to nearly 59% in 2020, when the pandemic suppressed corporate profits and government assistance for workers spiked. After that, however, it resumed an almost unbroken trend downward.

The downdraft has picked up the pace. After rising to a recent peak of 55.3% in the first quarter of 2025, the metric fell in every subsequent quarter. Things have only gotten worse for workers since the beginning of this year, due in part to inflation triggered by President Trump’s tariffs and spending on his war with Iran.

Hourly wages in the private non-farm sector increased in August by 10 cents, or 0.3%, over the previous month, and gained 3.1% on the year, according to the BLS. But those gains disappeared into the maw of inflation, which rose by 0.4% in August and by 3.4% since Jan. 1. If workers feel that they’re moving backwards, in other words, it’s not their imagination.

The new era of worker power that labor advocates proclaimed as the pandemic ebbed was something of a chimera. They based their optimism on a surge of successful union organizing drives at Starbucks stores, a hint of union interest at Amazon warehouses and higher minimum wages in cities and states across the country. Workers experienced a wave of mobility as demand outpaced labor supply.

“The labor market is experiencing a Great Upgrade,” the progressive Roosevelt Institute declared. The euphoria continued into 2022. “We’re in a moment where, politically, workers are ascendant,” David Madland of the Center for American Progress, a liberal think tank, told the investment publication Barron’s in May that year. (The article’s headline read: “How Workers Gained an Edge — and Why They Won’t Lose It Soon.”)

Some labor economists were less sanguine. Even the advances up to then still left miles to travel before the American working class recovered all the economic standing it had lost since the 1970s, observed Teresa Ghilarducci of the New School.

“A lot of the talk about labor having power is based on organizing efforts at Starbucks and Amazon,” Ghilarducci told me in 2022. Of 11 economic indicators she examined, she said, “most indicators show either declining labor power or give mixed signals.”

This was a period in which policy-makers were committed to an economic doctrine that saw employment and inflation moving in lockstep—that the only way to bring down inflation was to increase unemployment. That was a disquieting pointer to Federal Reserve Board policy, for the central bank counted controlling inflation, not enduring full employment, as one of its mandates.

Then-Fed Chairman Jerome H. Powell explicitly stated that unemployment had to rise for inflation to come down. “The labor market has remained extremely tight,” Powell said at a September 2022 news conference to explain the Fed’s decision to raise interest rates by three-quarters of a percentage point for the third time in a row.

As evidence for the tight labor market, Powell cited “the unemployment rate near a 50-year low, job vacancies near historical highs, and wage growth elevated … with demand for workers substantially exceeding the supply of available workers.” He concluded, with evident regret, “So far, there’s only modest evidence that the labor market is cooling off.”

Labor share isn’t universally favored as an economic indicator. That’s because it can be hard to distinguish labor income from investment income, especially as more workers become proprietors of their own businesses—do the earnings of Uber or Lyft drivers count as labor income, or the product of their investments in their car, their gas, their insurance and all the other spending they incur before accepting their passenger?

Wage income, moreover, isn’t just a key to middle- or working-class economics. The pattern has been skewed by higher incomes collected by those in the higher echelons of wage workers, like corporate chief executives, entertainers and professional athletes. By convention, much of their income gets counted in the labor share.

“It’s true that the typical worker has seen their share of the pie fall,” observed liberal economist Dean Baker of the Center for Economic and Policy Research, “but this is mostly from upward redistribution within the wage distribution. A much larger share of wage income is going to high-end earners, such as CEOS and other top execs, Wall Street types, well-situated STEM workers and protected professionals like doctors and dentists.”

Other liberal economists disdain labor share as a useful metric, or see it as a distraction from sober policy analysis. What’s important, wrote Jared Bernstein, the former top economic adviser to President Biden, is pushing for full employment, because that’s what gives workers the ability to fight the accumulation of political power in the hands of the 1%, or even the 0.1%.

“Social and economic justice,” Bernstein wrote in May, “remain a struggle for the political power that creates the opportunity for a fairer distribution of our economy’s prodigious wealth, income, and most importantly, opportunity.”

That’s amounts to a fight against the so-called K-shaped economy, in which the rich thrive and everyone else struggles.

“Since 2023, wealth has increased the most for high-income households, while inflation has risen the most for low-income households, with both factors helping explain the fact that real retail spending rose the most for high-income households,” wrote researchers at the New York Federal Reserve Bank this spring.

We shouldn’t let the debate about how to measure the labor share divert us from keeping our eye on the economic ball. It’s a signpost to the uneven distribution of income and wealth in America, but not the only one. Worker power has been declining since the pandemic. That trend has accelerated since the Trump administration has eviscerated agencies tasked with protecting worker rights such as the Department of Labor and the National Labor Relations Board, gifted wealthier wage-earners and investors with tax cuts and imposed an inflation tax on ordinary Americans.

Nor should we ignore labor share, however. In its raw form, it’s a measure of political power, and what it shows is that workers are losing and corporate interests are winning the battle. That’s what should concern us.

There was a brief moment at the tail end of the pandemic, already forgotten, at which it seemed that American workers had finally grasped the reins of power, with wage gains rising and organizing strength entering a new era.

The moment is forgotten today because whatever leverage labor thought it had acquired evaporated rapidly. And recently it has been scraping along the bottom.

Just this month, the government reported that labor share—”the fraction of economic output that accrues to workers,” as the Bureau of Labor Statistics defines it—reached 52.8% in the second quarter of this year. That’s the lowest level the BLS has recorded since it started taking the measurement, in 1947.

The labor share is a symptom of worker anxiety, of course, not the cause. But as a symptom it speaks volumes. It reflects growing wealth inequality, a tax system that comes down hard on wages but gives capital earnings a pass, an explosive growth in corporate profits and a shift of employment from large-scale manufacturing to gig-provided services.

Juxtaposing the labor share with corporate profits tells the full story: Since the first quarter of 2001, according to the BLS and the Bureau of Economic Analysis, after-tax corporate profits have risen nearly eight-fold while the labor share has declined by nearly 18%.

Labor share can be defined in many different ways, economists point out. But most agree that however it’s defined, its shrinkage is unmistakable. Through almost the entirety of the postwar period, up to the turn of the last century, the labor share hovered between about 62% and 65%, or roughly two-thirds of economic output.

It remained stable, observed economist Roc Armenter of the Federal Reserve Bank of Philadelphia in a 2015 paper, “through expansions, recessions, high and low inflation, and the long transition from an economy primarily based on manufacturing to one mainly centered on services.”

Indeed, that stability dated back to the prewar period, prompting economist John Maynard Keynes to describe it in 1936 as “a bit of a miracle.” Keynes’ quip has been turned on its head in recent years—Armenter titled his paper “A Bit of a Miracle No More.”

The labor share is often a useful indicator of the economic condition of the working class. The BLS reports that the percentage declined sharply during and after the 2001 and 2007-2009 recessions, but rose to nearly 59% in 2020, when the pandemic suppressed corporate profits and government assistance for workers spiked. After that, however, it resumed an almost unbroken trend downward.

The downdraft has picked up the pace. After rising to a recent peak of 55.3% in the first quarter of 2025, the metric fell in every subsequent quarter. Things have only gotten worse for workers since the beginning of this year, due in part to inflation triggered by President Trump’s tariffs and spending on his war with Iran.

Hourly wages in the private non-farm sector increased in August by 10 cents, or 0.3%, over the previous month, and gained 3.1% on the year, according to the BLS. But those gains disappeared into the maw of inflation, which rose by 0.4% in August and by 3.4% since Jan. 1. If workers feel that they’re moving backwards, in other words, it’s not their imagination.

The new era of worker power that labor advocates proclaimed as the pandemic ebbed was something of a chimera. They based their optimism on a surge of successful union organizing drives at Starbucks stores, a hint of union interest at Amazon warehouses and higher minimum wages in cities and states across the country. Workers experienced a wave of mobility as demand outpaced labor supply.

“The labor market is experiencing a Great Upgrade,” the progressive Roosevelt Institute declared. The euphoria continued into 2022. “We’re in a moment where, politically, workers are ascendant,” David Madland of the Center for American Progress, a liberal think tank, told the investment publication Barron’s in May that year. (The article’s headline read: “How Workers Gained an Edge — and Why They Won’t Lose It Soon.”)

Some labor economists were less sanguine. Even the advances up to then still left miles to travel before the American working class recovered all the economic standing it had lost since the 1970s, observed Teresa Ghilarducci of the New School.

“A lot of the talk about labor having power is based on organizing efforts at Starbucks and Amazon,” Ghilarducci told me in 2022. Of 11 economic indicators she examined, she said, “most indicators show either declining labor power or give mixed signals.”

This was a period in which policy-makers were committed to an economic doctrine that saw employment and inflation moving in lockstep—that the only way to bring down inflation was to increase unemployment. That was a disquieting pointer to Federal Reserve Board policy, for the central bank counted controlling inflation, not enduring full employment, as one of its mandates.

Then-Fed Chairman Jerome H. Powell explicitly stated that unemployment had to rise for inflation to come down. “The labor market has remained extremely tight,” Powell said at a September 2022 news conference to explain the Fed’s decision to raise interest rates by three-quarters of a percentage point for the third time in a row.

As evidence for the tight labor market, Powell cited “the unemployment rate near a 50-year low, job vacancies near historical highs, and wage growth elevated … with demand for workers substantially exceeding the supply of available workers.” He concluded, with evident regret, “So far, there’s only modest evidence that the labor market is cooling off.”

Labor share isn’t universally favored as an economic indicator. That’s because it can be hard to distinguish labor income from investment income, especially as more workers become proprietors of their own businesses—do the earnings of Uber or Lyft drivers count as labor income, or the product of their investments in their car, their gas, their insurance and all the other spending they incur before accepting their passenger?

Wage income, moreover, isn’t just a key to middle- or working-class economics. The pattern has been skewed by higher incomes collected by those in the higher echelons of wage workers, like corporate chief executives, entertainers and professional athletes. By convention, much of their income gets counted in the labor share.

“It’s true that the typical worker has seen their share of the pie fall,” observed liberal economist Dean Baker of the Center for Economic and Policy Research, “but this is mostly from upward redistribution within the wage distribution. A much larger share of wage income is going to high-end earners, such as CEOS and other top execs, Wall Street types, well-situated STEM workers and protected professionals like doctors and dentists.”

Other liberal economists disdain labor share as a useful metric, or see it as a distraction from sober policy analysis. What’s important, wrote Jared Bernstein, the former top economic adviser to President Biden, is pushing for full employment, because that’s what gives workers the ability to fight the accumulation of political power in the hands of the 1%, or even the 0.1%.

“Social and economic justice,” Bernstein wrote in May, “remain a struggle for the political power that creates the opportunity for a fairer distribution of our economy’s prodigious wealth, income, and most importantly, opportunity.”

That’s amounts to a fight against the so-called K-shaped economy, in which the rich thrive and everyone else struggles.

“Since 2023, wealth has increased the most for high-income households, while inflation has risen the most for low-income households, with both factors helping explain the fact that real retail spending rose the most for high-income households,” wrote researchers at the New York Federal Reserve Bank this spring.

We shouldn’t let the debate about how to measure the labor share divert us from keeping our eye on the economic ball. It’s a signpost to the uneven distribution of income and wealth in America, but not the only one. Worker power has been declining since the pandemic. That trend has accelerated since the Trump administration has eviscerated agencies tasked with protecting worker rights such as the Department of Labor and the National Labor Relations Board, gifted wealthier wage-earners and investors with tax cuts and imposed an inflation tax on ordinary Americans.

Nor should we ignore labor share, however. In its raw form, it’s a measure of political power, and what it shows is that workers are losing and corporate interests are winning the battle. That’s what should concern us.

There was a brief moment at the tail end of the pandemic, already forgotten, at which it seemed that American workers had finally grasped the reins of power, with wage gains rising and organizing strength entering a new era.

The moment is forgotten today because whatever leverage labor thought it had acquired evaporated rapidly. And recently it has been scraping along the bottom.

Just this month, the government reported that labor share—”the fraction of economic output that accrues to workers,” as the Bureau of Labor Statistics defines it—reached 52.8% in the second quarter of this year. That’s the lowest level the BLS has recorded since it started taking the measurement, in 1947.

The labor share is a symptom of worker anxiety, of course, not the cause. But as a symptom it speaks volumes. It reflects growing wealth inequality, a tax system that comes down hard on wages but gives capital earnings a pass, an explosive growth in corporate profits and a shift of employment from large-scale manufacturing to gig-provided services.

Juxtaposing the labor share with corporate profits tells the full story: Since the first quarter of 2001, according to the BLS and the Bureau of Economic Analysis, after-tax corporate profits have risen nearly eight-fold while the labor share has declined by nearly 18%.

Labor share can be defined in many different ways, economists point out. But most agree that however it’s defined, its shrinkage is unmistakable. Through almost the entirety of the postwar period, up to the turn of the last century, the labor share hovered between about 62% and 65%, or roughly two-thirds of economic output.

It remained stable, observed economist Roc Armenter of the Federal Reserve Bank of Philadelphia in a 2015 paper, “through expansions, recessions, high and low inflation, and the long transition from an economy primarily based on manufacturing to one mainly centered on services.”

Indeed, that stability dated back to the prewar period, prompting economist John Maynard Keynes to describe it in 1936 as “a bit of a miracle.” Keynes’ quip has been turned on its head in recent years—Armenter titled his paper “A Bit of a Miracle No More.”

The labor share is often a useful indicator of the economic condition of the working class. The BLS reports that the percentage declined sharply during and after the 2001 and 2007-2009 recessions, but rose to nearly 59% in 2020, when the pandemic suppressed corporate profits and government assistance for workers spiked. After that, however, it resumed an almost unbroken trend downward.

The downdraft has picked up the pace. After rising to a recent peak of 55.3% in the first quarter of 2025, the metric fell in every subsequent quarter. Things have only gotten worse for workers since the beginning of this year, due in part to inflation triggered by President Trump’s tariffs and spending on his war with Iran.

Hourly wages in the private non-farm sector increased in August by 10 cents, or 0.3%, over the previous month, and gained 3.1% on the year, according to the BLS. But those gains disappeared into the maw of inflation, which rose by 0.4% in August and by 3.4% since Jan. 1. If workers feel that they’re moving backwards, in other words, it’s not their imagination.

The new era of worker power that labor advocates proclaimed as the pandemic ebbed was something of a chimera. They based their optimism on a surge of successful union organizing drives at Starbucks stores, a hint of union interest at Amazon warehouses and higher minimum wages in cities and states across the country. Workers experienced a wave of mobility as demand outpaced labor supply.

“The labor market is experiencing a Great Upgrade,” the progressive Roosevelt Institute declared. The euphoria continued into 2022. “We’re in a moment where, politically, workers are ascendant,” David Madland of the Center for American Progress, a liberal think tank, told the investment publication Barron’s in May that year. (The article’s headline read: “How Workers Gained an Edge — and Why They Won’t Lose It Soon.”)

Some labor economists were less sanguine. Even the advances up to then still left miles to travel before the American working class recovered all the economic standing it had lost since the 1970s, observed Teresa Ghilarducci of the New School.

“A lot of the talk about labor having power is based on organizing efforts at Starbucks and Amazon,” Ghilarducci told me in 2022. Of 11 economic indicators she examined, she said, “most indicators show either declining labor power or give mixed signals.”

This was a period in which policy-makers were committed to an economic doctrine that saw employment and inflation moving in lockstep—that the only way to bring down inflation was to increase unemployment. That was a disquieting pointer to Federal Reserve Board policy, for the central bank counted controlling inflation, not enduring full employment, as one of its mandates.

Then-Fed Chairman Jerome H. Powell explicitly stated that unemployment had to rise for inflation to come down. “The labor market has remained extremely tight,” Powell said at a September 2022 news conference to explain the Fed’s decision to raise interest rates by three-quarters of a percentage point for the third time in a row.

As evidence for the tight labor market, Powell cited “the unemployment rate near a 50-year low, job vacancies near historical highs, and wage growth elevated … with demand for workers substantially exceeding the supply of available workers.” He concluded, with evident regret, “So far, there’s only modest evidence that the labor market is cooling off.”

Labor share isn’t universally favored as an economic indicator. That’s because it can be hard to distinguish labor income from investment income, especially as more workers become proprietors of their own businesses—do the earnings of Uber or Lyft drivers count as labor income, or the product of their investments in their car, their gas, their insurance and all the other spending they incur before accepting their passenger?

Wage income, moreover, isn’t just a key to middle- or working-class economics. The pattern has been skewed by higher incomes collected by those in the higher echelons of wage workers, like corporate chief executives, entertainers and professional athletes. By convention, much of their income gets counted in the labor share.

“It’s true that the typical worker has seen their share of the pie fall,” observed liberal economist Dean Baker of the Center for Economic and Policy Research, “but this is mostly from upward redistribution within the wage distribution. A much larger share of wage income is going to high-end earners, such as CEOS and other top execs, Wall Street types, well-situated STEM workers and protected professionals like doctors and dentists.”

Other liberal economists disdain labor share as a useful metric, or see it as a distraction from sober policy analysis. What’s important, wrote Jared Bernstein, the former top economic adviser to President Biden, is pushing for full employment, because that’s what gives workers the ability to fight the accumulation of political power in the hands of the 1%, or even the 0.1%.

“Social and economic justice,” Bernstein wrote in May, “remain a struggle for the political power that creates the opportunity for a fairer distribution of our economy’s prodigious wealth, income, and most importantly, opportunity.”

That’s amounts to a fight against the so-called K-shaped economy, in which the rich thrive and everyone else struggles.

“Since 2023, wealth has increased the most for high-income households, while inflation has risen the most for low-income households, with both factors helping explain the fact that real retail spending rose the most for high-income households,” wrote researchers at the New York Federal Reserve Bank this spring.

We shouldn’t let the debate about how to measure the labor share divert us from keeping our eye on the economic ball. It’s a signpost to the uneven distribution of income and wealth in America, but not the only one. Worker power has been declining since the pandemic. That trend has accelerated since the Trump administration has eviscerated agencies tasked with protecting worker rights such as the Department of Labor and the National Labor Relations Board, gifted wealthier wage-earners and investors with tax cuts and imposed an inflation tax on ordinary Americans.

Nor should we ignore labor share, however. In its raw form, it’s a measure of political power, and what it shows is that workers are losing and corporate interests are winning the battle. That’s what should concern us.

There was a brief moment at the tail end of the pandemic, already forgotten, at which it seemed that American workers had finally grasped the reins of power, with wage gains rising and organizing strength entering a new era.

The moment is forgotten today because whatever leverage labor thought it had acquired evaporated rapidly. And recently it has been scraping along the bottom.

Just this month, the government reported that labor share—”the fraction of economic output that accrues to workers,” as the Bureau of Labor Statistics defines it—reached 52.8% in the second quarter of this year. That’s the lowest level the BLS has recorded since it started taking the measurement, in 1947.

The labor share is a symptom of worker anxiety, of course, not the cause. But as a symptom it speaks volumes. It reflects growing wealth inequality, a tax system that comes down hard on wages but gives capital earnings a pass, an explosive growth in corporate profits and a shift of employment from large-scale manufacturing to gig-provided services.

Juxtaposing the labor share with corporate profits tells the full story: Since the first quarter of 2001, according to the BLS and the Bureau of Economic Analysis, after-tax corporate profits have risen nearly eight-fold while the labor share has declined by nearly 18%.

Labor share can be defined in many different ways, economists point out. But most agree that however it’s defined, its shrinkage is unmistakable. Through almost the entirety of the postwar period, up to the turn of the last century, the labor share hovered between about 62% and 65%, or roughly two-thirds of economic output.

It remained stable, observed economist Roc Armenter of the Federal Reserve Bank of Philadelphia in a 2015 paper, “through expansions, recessions, high and low inflation, and the long transition from an economy primarily based on manufacturing to one mainly centered on services.”

Indeed, that stability dated back to the prewar period, prompting economist John Maynard Keynes to describe it in 1936 as “a bit of a miracle.” Keynes’ quip has been turned on its head in recent years—Armenter titled his paper “A Bit of a Miracle No More.”

The labor share is often a useful indicator of the economic condition of the working class. The BLS reports that the percentage declined sharply during and after the 2001 and 2007-2009 recessions, but rose to nearly 59% in 2020, when the pandemic suppressed corporate profits and government assistance for workers spiked. After that, however, it resumed an almost unbroken trend downward.

The downdraft has picked up the pace. After rising to a recent peak of 55.3% in the first quarter of 2025, the metric fell in every subsequent quarter. Things have only gotten worse for workers since the beginning of this year, due in part to inflation triggered by President Trump’s tariffs and spending on his war with Iran.

Hourly wages in the private non-farm sector increased in August by 10 cents, or 0.3%, over the previous month, and gained 3.1% on the year, according to the BLS. But those gains disappeared into the maw of inflation, which rose by 0.4% in August and by 3.4% since Jan. 1. If workers feel that they’re moving backwards, in other words, it’s not their imagination.

The new era of worker power that labor advocates proclaimed as the pandemic ebbed was something of a chimera. They based their optimism on a surge of successful union organizing drives at Starbucks stores, a hint of union interest at Amazon warehouses and higher minimum wages in cities and states across the country. Workers experienced a wave of mobility as demand outpaced labor supply.

“The labor market is experiencing a Great Upgrade,” the progressive Roosevelt Institute declared. The euphoria continued into 2022. “We’re in a moment where, politically, workers are ascendant,” David Madland of the Center for American Progress, a liberal think tank, told the investment publication Barron’s in May that year. (The article’s headline read: “How Workers Gained an Edge — and Why They Won’t Lose It Soon.”)

Some labor economists were less sanguine. Even the advances up to then still left miles to travel before the American working class recovered all the economic standing it had lost since the 1970s, observed Teresa Ghilarducci of the New School.

“A lot of the talk about labor having power is based on organizing efforts at Starbucks and Amazon,” Ghilarducci told me in 2022. Of 11 economic indicators she examined, she said, “most indicators show either declining labor power or give mixed signals.”

This was a period in which policy-makers were committed to an economic doctrine that saw employment and inflation moving in lockstep—that the only way to bring down inflation was to increase unemployment. That was a disquieting pointer to Federal Reserve Board policy, for the central bank counted controlling inflation, not enduring full employment, as one of its mandates.

Then-Fed Chairman Jerome H. Powell explicitly stated that unemployment had to rise for inflation to come down. “The labor market has remained extremely tight,” Powell said at a September 2022 news conference to explain the Fed’s decision to raise interest rates by three-quarters of a percentage point for the third time in a row.

As evidence for the tight labor market, Powell cited “the unemployment rate near a 50-year low, job vacancies near historical highs, and wage growth elevated … with demand for workers substantially exceeding the supply of available workers.” He concluded, with evident regret, “So far, there’s only modest evidence that the labor market is cooling off.”

Labor share isn’t universally favored as an economic indicator. That’s because it can be hard to distinguish labor income from investment income, especially as more workers become proprietors of their own businesses—do the earnings of Uber or Lyft drivers count as labor income, or the product of their investments in their car, their gas, their insurance and all the other spending they incur before accepting their passenger?

Wage income, moreover, isn’t just a key to middle- or working-class economics. The pattern has been skewed by higher incomes collected by those in the higher echelons of wage workers, like corporate chief executives, entertainers and professional athletes. By convention, much of their income gets counted in the labor share.

“It’s true that the typical worker has seen their share of the pie fall,” observed liberal economist Dean Baker of the Center for Economic and Policy Research, “but this is mostly from upward redistribution within the wage distribution. A much larger share of wage income is going to high-end earners, such as CEOS and other top execs, Wall Street types, well-situated STEM workers and protected professionals like doctors and dentists.”

Other liberal economists disdain labor share as a useful metric, or see it as a distraction from sober policy analysis. What’s important, wrote Jared Bernstein, the former top economic adviser to President Biden, is pushing for full employment, because that’s what gives workers the ability to fight the accumulation of political power in the hands of the 1%, or even the 0.1%.

“Social and economic justice,” Bernstein wrote in May, “remain a struggle for the political power that creates the opportunity for a fairer distribution of our economy’s prodigious wealth, income, and most importantly, opportunity.”

That’s amounts to a fight against the so-called K-shaped economy, in which the rich thrive and everyone else struggles.

“Since 2023, wealth has increased the most for high-income households, while inflation has risen the most for low-income households, with both factors helping explain the fact that real retail spending rose the most for high-income households,” wrote researchers at the New York Federal Reserve Bank this spring.

We shouldn’t let the debate about how to measure the labor share divert us from keeping our eye on the economic ball. It’s a signpost to the uneven distribution of income and wealth in America, but not the only one. Worker power has been declining since the pandemic. That trend has accelerated since the Trump administration has eviscerated agencies tasked with protecting worker rights such as the Department of Labor and the National Labor Relations Board, gifted wealthier wage-earners and investors with tax cuts and imposed an inflation tax on ordinary Americans.

Nor should we ignore labor share, however. In its raw form, it’s a measure of political power, and what it shows is that workers are losing and corporate interests are winning the battle. That’s what should concern us.

There was a brief moment at the tail end of the pandemic, already forgotten, at which it seemed that American workers had finally grasped the reins of power, with wage gains rising and organizing strength entering a new era.

The moment is forgotten today because whatever leverage labor thought it had acquired evaporated rapidly. And recently it has been scraping along the bottom.

Just this month, the government reported that labor share—”the fraction of economic output that accrues to workers,” as the Bureau of Labor Statistics defines it—reached 52.8% in the second quarter of this year. That’s the lowest level the BLS has recorded since it started taking the measurement, in 1947.

The labor share is a symptom of worker anxiety, of course, not the cause. But as a symptom it speaks volumes. It reflects growing wealth inequality, a tax system that comes down hard on wages but gives capital earnings a pass, an explosive growth in corporate profits and a shift of employment from large-scale manufacturing to gig-provided services.

Juxtaposing the labor share with corporate profits tells the full story: Since the first quarter of 2001, according to the BLS and the Bureau of Economic Analysis, after-tax corporate profits have risen nearly eight-fold while the labor share has declined by nearly 18%.

Labor share can be defined in many different ways, economists point out. But most agree that however it’s defined, its shrinkage is unmistakable. Through almost the entirety of the postwar period, up to the turn of the last century, the labor share hovered between about 62% and 65%, or roughly two-thirds of economic output.

It remained stable, observed economist Roc Armenter of the Federal Reserve Bank of Philadelphia in a 2015 paper, “through expansions, recessions, high and low inflation, and the long transition from an economy primarily based on manufacturing to one mainly centered on services.”

Indeed, that stability dated back to the prewar period, prompting economist John Maynard Keynes to describe it in 1936 as “a bit of a miracle.” Keynes’ quip has been turned on its head in recent years—Armenter titled his paper “A Bit of a Miracle No More.”

The labor share is often a useful indicator of the economic condition of the working class. The BLS reports that the percentage declined sharply during and after the 2001 and 2007-2009 recessions, but rose to nearly 59% in 2020, when the pandemic suppressed corporate profits and government assistance for workers spiked. After that, however, it resumed an almost unbroken trend downward.

The downdraft has picked up the pace. After rising to a recent peak of 55.3% in the first quarter of 2025, the metric fell in every subsequent quarter. Things have only gotten worse for workers since the beginning of this year, due in part to inflation triggered by President Trump’s tariffs and spending on his war with Iran.

Hourly wages in the private non-farm sector increased in August by 10 cents, or 0.3%, over the previous month, and gained 3.1% on the year, according to the BLS. But those gains disappeared into the maw of inflation, which rose by 0.4% in August and by 3.4% since Jan. 1. If workers feel that they’re moving backwards, in other words, it’s not their imagination.

The new era of worker power that labor advocates proclaimed as the pandemic ebbed was something of a chimera. They based their optimism on a surge of successful union organizing drives at Starbucks stores, a hint of union interest at Amazon warehouses and higher minimum wages in cities and states across the country. Workers experienced a wave of mobility as demand outpaced labor supply.

“The labor market is experiencing a Great Upgrade,” the progressive Roosevelt Institute declared. The euphoria continued into 2022. “We’re in a moment where, politically, workers are ascendant,” David Madland of the Center for American Progress, a liberal think tank, told the investment publication Barron’s in May that year. (The article’s headline read: “How Workers Gained an Edge — and Why They Won’t Lose It Soon.”)

Some labor economists were less sanguine. Even the advances up to then still left miles to travel before the American working class recovered all the economic standing it had lost since the 1970s, observed Teresa Ghilarducci of the New School.

“A lot of the talk about labor having power is based on organizing efforts at Starbucks and Amazon,” Ghilarducci told me in 2022. Of 11 economic indicators she examined, she said, “most indicators show either declining labor power or give mixed signals.”

This was a period in which policy-makers were committed to an economic doctrine that saw employment and inflation moving in lockstep—that the only way to bring down inflation was to increase unemployment. That was a disquieting pointer to Federal Reserve Board policy, for the central bank counted controlling inflation, not enduring full employment, as one of its mandates.

Then-Fed Chairman Jerome H. Powell explicitly stated that unemployment had to rise for inflation to come down. “The labor market has remained extremely tight,” Powell said at a September 2022 news conference to explain the Fed’s decision to raise interest rates by three-quarters of a percentage point for the third time in a row.

As evidence for the tight labor market, Powell cited “the unemployment rate near a 50-year low, job vacancies near historical highs, and wage growth elevated … with demand for workers substantially exceeding the supply of available workers.” He concluded, with evident regret, “So far, there’s only modest evidence that the labor market is cooling off.”

Labor share isn’t universally favored as an economic indicator. That’s because it can be hard to distinguish labor income from investment income, especially as more workers become proprietors of their own businesses—do the earnings of Uber or Lyft drivers count as labor income, or the product of their investments in their car, their gas, their insurance and all the other spending they incur before accepting their passenger?

Wage income, moreover, isn’t just a key to middle- or working-class economics. The pattern has been skewed by higher incomes collected by those in the higher echelons of wage workers, like corporate chief executives, entertainers and professional athletes. By convention, much of their income gets counted in the labor share.

“It’s true that the typical worker has seen their share of the pie fall,” observed liberal economist Dean Baker of the Center for Economic and Policy Research, “but this is mostly from upward redistribution within the wage distribution. A much larger share of wage income is going to high-end earners, such as CEOS and other top execs, Wall Street types, well-situated STEM workers and protected professionals like doctors and dentists.”

Other liberal economists disdain labor share as a useful metric, or see it as a distraction from sober policy analysis. What’s important, wrote Jared Bernstein, the former top economic adviser to President Biden, is pushing for full employment, because that’s what gives workers the ability to fight the accumulation of political power in the hands of the 1%, or even the 0.1%.

“Social and economic justice,” Bernstein wrote in May, “remain a struggle for the political power that creates the opportunity for a fairer distribution of our economy’s prodigious wealth, income, and most importantly, opportunity.”

That’s amounts to a fight against the so-called K-shaped economy, in which the rich thrive and everyone else struggles.

“Since 2023, wealth has increased the most for high-income households, while inflation has risen the most for low-income households, with both factors helping explain the fact that real retail spending rose the most for high-income households,” wrote researchers at the New York Federal Reserve Bank this spring.

We shouldn’t let the debate about how to measure the labor share divert us from keeping our eye on the economic ball. It’s a signpost to the uneven distribution of income and wealth in America, but not the only one. Worker power has been declining since the pandemic. That trend has accelerated since the Trump administration has eviscerated agencies tasked with protecting worker rights such as the Department of Labor and the National Labor Relations Board, gifted wealthier wage-earners and investors with tax cuts and imposed an inflation tax on ordinary Americans.

Nor should we ignore labor share, however. In its raw form, it’s a measure of political power, and what it shows is that workers are losing and corporate interests are winning the battle. That’s what should concern us.

There was a brief moment at the tail end of the pandemic, already forgotten, at which it seemed that American workers had finally grasped the reins of power, with wage gains rising and organizing strength entering a new era.

The moment is forgotten today because whatever leverage labor thought it had acquired evaporated rapidly. And recently it has been scraping along the bottom.

Just this month, the government reported that labor share—”the fraction of economic output that accrues to workers,” as the Bureau of Labor Statistics defines it—reached 52.8% in the second quarter of this year. That’s the lowest level the BLS has recorded since it started taking the measurement, in 1947.

The labor share is a symptom of worker anxiety, of course, not the cause. But as a symptom it speaks volumes. It reflects growing wealth inequality, a tax system that comes down hard on wages but gives capital earnings a pass, an explosive growth in corporate profits and a shift of employment from large-scale manufacturing to gig-provided services.

Juxtaposing the labor share with corporate profits tells the full story: Since the first quarter of 2001, according to the BLS and the Bureau of Economic Analysis, after-tax corporate profits have risen nearly eight-fold while the labor share has declined by nearly 18%.

Labor share can be defined in many different ways, economists point out. But most agree that however it’s defined, its shrinkage is unmistakable. Through almost the entirety of the postwar period, up to the turn of the last century, the labor share hovered between about 62% and 65%, or roughly two-thirds of economic output.

It remained stable, observed economist Roc Armenter of the Federal Reserve Bank of Philadelphia in a 2015 paper, “through expansions, recessions, high and low inflation, and the long transition from an economy primarily based on manufacturing to one mainly centered on services.”

Indeed, that stability dated back to the prewar period, prompting economist John Maynard Keynes to describe it in 1936 as “a bit of a miracle.” Keynes’ quip has been turned on its head in recent years—Armenter titled his paper “A Bit of a Miracle No More.”

The labor share is often a useful indicator of the economic condition of the working class. The BLS reports that the percentage declined sharply during and after the 2001 and 2007-2009 recessions, but rose to nearly 59% in 2020, when the pandemic suppressed corporate profits and government assistance for workers spiked. After that, however, it resumed an almost unbroken trend downward.

The downdraft has picked up the pace. After rising to a recent peak of 55.3% in the first quarter of 2025, the metric fell in every subsequent quarter. Things have only gotten worse for workers since the beginning of this year, due in part to inflation triggered by President Trump’s tariffs and spending on his war with Iran.

Hourly wages in the private non-farm sector increased in August by 10 cents, or 0.3%, over the previous month, and gained 3.1% on the year, according to the BLS. But those gains disappeared into the maw of inflation, which rose by 0.4% in August and by 3.4% since Jan. 1. If workers feel that they’re moving backwards, in other words, it’s not their imagination.

The new era of worker power that labor advocates proclaimed as the pandemic ebbed was something of a chimera. They based their optimism on a surge of successful union organizing drives at Starbucks stores, a hint of union interest at Amazon warehouses and higher minimum wages in cities and states across the country. Workers experienced a wave of mobility as demand outpaced labor supply.

“The labor market is experiencing a Great Upgrade,” the progressive Roosevelt Institute declared. The euphoria continued into 2022. “We’re in a moment where, politically, workers are ascendant,” David Madland of the Center for American Progress, a liberal think tank, told the investment publication Barron’s in May that year. (The article’s headline read: “How Workers Gained an Edge — and Why They Won’t Lose It Soon.”)

Some labor economists were less sanguine. Even the advances up to then still left miles to travel before the American working class recovered all the economic standing it had lost since the 1970s, observed Teresa Ghilarducci of the New School.

“A lot of the talk about labor having power is based on organizing efforts at Starbucks and Amazon,” Ghilarducci told me in 2022. Of 11 economic indicators she examined, she said, “most indicators show either declining labor power or give mixed signals.”

This was a period in which policy-makers were committed to an economic doctrine that saw employment and inflation moving in lockstep—that the only way to bring down inflation was to increase unemployment. That was a disquieting pointer to Federal Reserve Board policy, for the central bank counted controlling inflation, not enduring full employment, as one of its mandates.

Then-Fed Chairman Jerome H. Powell explicitly stated that unemployment had to rise for inflation to come down. “The labor market has remained extremely tight,” Powell said at a September 2022 news conference to explain the Fed’s decision to raise interest rates by three-quarters of a percentage point for the third time in a row.

As evidence for the tight labor market, Powell cited “the unemployment rate near a 50-year low, job vacancies near historical highs, and wage growth elevated … with demand for workers substantially exceeding the supply of available workers.” He concluded, with evident regret, “So far, there’s only modest evidence that the labor market is cooling off.”

Labor share isn’t universally favored as an economic indicator. That’s because it can be hard to distinguish labor income from investment income, especially as more workers become proprietors of their own businesses—do the earnings of Uber or Lyft drivers count as labor income, or the product of their investments in their car, their gas, their insurance and all the other spending they incur before accepting their passenger?

Wage income, moreover, isn’t just a key to middle- or working-class economics. The pattern has been skewed by higher incomes collected by those in the higher echelons of wage workers, like corporate chief executives, entertainers and professional athletes. By convention, much of their income gets counted in the labor share.

“It’s true that the typical worker has seen their share of the pie fall,” observed liberal economist Dean Baker of the Center for Economic and Policy Research, “but this is mostly from upward redistribution within the wage distribution. A much larger share of wage income is going to high-end earners, such as CEOS and other top execs, Wall Street types, well-situated STEM workers and protected professionals like doctors and dentists.”

Other liberal economists disdain labor share as a useful metric, or see it as a distraction from sober policy analysis. What’s important, wrote Jared Bernstein, the former top economic adviser to President Biden, is pushing for full employment, because that’s what gives workers the ability to fight the accumulation of political power in the hands of the 1%, or even the 0.1%.

“Social and economic justice,” Bernstein wrote in May, “remain a struggle for the political power that creates the opportunity for a fairer distribution of our economy’s prodigious wealth, income, and most importantly, opportunity.”

That’s amounts to a fight against the so-called K-shaped economy, in which the rich thrive and everyone else struggles.

“Since 2023, wealth has increased the most for high-income households, while inflation has risen the most for low-income households, with both factors helping explain the fact that real retail spending rose the most for high-income households,” wrote researchers at the New York Federal Reserve Bank this spring.

We shouldn’t let the debate about how to measure the labor share divert us from keeping our eye on the economic ball. It’s a signpost to the uneven distribution of income and wealth in America, but not the only one. Worker power has been declining since the pandemic. That trend has accelerated since the Trump administration has eviscerated agencies tasked with protecting worker rights such as the Department of Labor and the National Labor Relations Board, gifted wealthier wage-earners and investors with tax cuts and imposed an inflation tax on ordinary Americans.

Nor should we ignore labor share, however. In its raw form, it’s a measure of political power, and what it shows is that workers are losing and corporate interests are winning the battle. That’s what should concern us.

There was a brief moment at the tail end of the pandemic, already forgotten, at which it seemed that American workers had finally grasped the reins of power, with wage gains rising and organizing strength entering a new era.

The moment is forgotten today because whatever leverage labor thought it had acquired evaporated rapidly. And recently it has been scraping along the bottom.

Just this month, the government reported that labor share—”the fraction of economic output that accrues to workers,” as the Bureau of Labor Statistics defines it—reached 52.8% in the second quarter of this year. That’s the lowest level the BLS has recorded since it started taking the measurement, in 1947.

The labor share is a symptom of worker anxiety, of course, not the cause. But as a symptom it speaks volumes. It reflects growing wealth inequality, a tax system that comes down hard on wages but gives capital earnings a pass, an explosive growth in corporate profits and a shift of employment from large-scale manufacturing to gig-provided services.

Juxtaposing the labor share with corporate profits tells the full story: Since the first quarter of 2001, according to the BLS and the Bureau of Economic Analysis, after-tax corporate profits have risen nearly eight-fold while the labor share has declined by nearly 18%.

Labor share can be defined in many different ways, economists point out. But most agree that however it’s defined, its shrinkage is unmistakable. Through almost the entirety of the postwar period, up to the turn of the last century, the labor share hovered between about 62% and 65%, or roughly two-thirds of economic output.

It remained stable, observed economist Roc Armenter of the Federal Reserve Bank of Philadelphia in a 2015 paper, “through expansions, recessions, high and low inflation, and the long transition from an economy primarily based on manufacturing to one mainly centered on services.”

Indeed, that stability dated back to the prewar period, prompting economist John Maynard Keynes to describe it in 1936 as “a bit of a miracle.” Keynes’ quip has been turned on its head in recent years—Armenter titled his paper “A Bit of a Miracle No More.”

The labor share is often a useful indicator of the economic condition of the working class. The BLS reports that the percentage declined sharply during and after the 2001 and 2007-2009 recessions, but rose to nearly 59% in 2020, when the pandemic suppressed corporate profits and government assistance for workers spiked. After that, however, it resumed an almost unbroken trend downward.

The downdraft has picked up the pace. After rising to a recent peak of 55.3% in the first quarter of 2025, the metric fell in every subsequent quarter. Things have only gotten worse for workers since the beginning of this year, due in part to inflation triggered by President Trump’s tariffs and spending on his war with Iran.

Hourly wages in the private non-farm sector increased in August by 10 cents, or 0.3%, over the previous month, and gained 3.1% on the year, according to the BLS. But those gains disappeared into the maw of inflation, which rose by 0.4% in August and by 3.4% since Jan. 1. If workers feel that they’re moving backwards, in other words, it’s not their imagination.

The new era of worker power that labor advocates proclaimed as the pandemic ebbed was something of a chimera. They based their optimism on a surge of successful union organizing drives at Starbucks stores, a hint of union interest at Amazon warehouses and higher minimum wages in cities and states across the country. Workers experienced a wave of mobility as demand outpaced labor supply.

“The labor market is experiencing a Great Upgrade,” the progressive Roosevelt Institute declared. The euphoria continued into 2022. “We’re in a moment where, politically, workers are ascendant,” David Madland of the Center for American Progress, a liberal think tank, told the investment publication Barron’s in May that year. (The article’s headline read: “How Workers Gained an Edge — and Why They Won’t Lose It Soon.”)

Some labor economists were less sanguine. Even the advances up to then still left miles to travel before the American working class recovered all the economic standing it had lost since the 1970s, observed Teresa Ghilarducci of the New School.

“A lot of the talk about labor having power is based on organizing efforts at Starbucks and Amazon,” Ghilarducci told me in 2022. Of 11 economic indicators she examined, she said, “most indicators show either declining labor power or give mixed signals.”

This was a period in which policy-makers were committed to an economic doctrine that saw employment and inflation moving in lockstep—that the only way to bring down inflation was to increase unemployment. That was a disquieting pointer to Federal Reserve Board policy, for the central bank counted controlling inflation, not enduring full employment, as one of its mandates.

Then-Fed Chairman Jerome H. Powell explicitly stated that unemployment had to rise for inflation to come down. “The labor market has remained extremely tight,” Powell said at a September 2022 news conference to explain the Fed’s decision to raise interest rates by three-quarters of a percentage point for the third time in a row.

As evidence for the tight labor market, Powell cited “the unemployment rate near a 50-year low, job vacancies near historical highs, and wage growth elevated … with demand for workers substantially exceeding the supply of available workers.” He concluded, with evident regret, “So far, there’s only modest evidence that the labor market is cooling off.”

Labor share isn’t universally favored as an economic indicator. That’s because it can be hard to distinguish labor income from investment income, especially as more workers become proprietors of their own businesses—do the earnings of Uber or Lyft drivers count as labor income, or the product of their investments in their car, their gas, their insurance and all the other spending they incur before accepting their passenger?

Wage income, moreover, isn’t just a key to middle- or working-class economics. The pattern has been skewed by higher incomes collected by those in the higher echelons of wage workers, like corporate chief executives, entertainers and professional athletes. By convention, much of their income gets counted in the labor share.

“It’s true that the typical worker has seen their share of the pie fall,” observed liberal economist Dean Baker of the Center for Economic and Policy Research, “but this is mostly from upward redistribution within the wage distribution. A much larger share of wage income is going to high-end earners, such as CEOS and other top execs, Wall Street types, well-situated STEM workers and protected professionals like doctors and dentists.”

Other liberal economists disdain labor share as a useful metric, or see it as a distraction from sober policy analysis. What’s important, wrote Jared Bernstein, the former top economic adviser to President Biden, is pushing for full employment, because that’s what gives workers the ability to fight the accumulation of political power in the hands of the 1%, or even the 0.1%.

“Social and economic justice,” Bernstein wrote in May, “remain a struggle for the political power that creates the opportunity for a fairer distribution of our economy’s prodigious wealth, income, and most importantly, opportunity.”

That’s amounts to a fight against the so-called K-shaped economy, in which the rich thrive and everyone else struggles.

“Since 2023, wealth has increased the most for high-income households, while inflation has risen the most for low-income households, with both factors helping explain the fact that real retail spending rose the most for high-income households,” wrote researchers at the New York Federal Reserve Bank this spring.

We shouldn’t let the debate about how to measure the labor share divert us from keeping our eye on the economic ball. It’s a signpost to the uneven distribution of income and wealth in America, but not the only one. Worker power has been declining since the pandemic. That trend has accelerated since the Trump administration has eviscerated agencies tasked with protecting worker rights such as the Department of Labor and the National Labor Relations Board, gifted wealthier wage-earners and investors with tax cuts and imposed an inflation tax on ordinary Americans.

Nor should we ignore labor share, however. In its raw form, it’s a measure of political power, and what it shows is that workers are losing and corporate interests are winning the battle. That’s what should concern us.

There was a brief moment at the tail end of the pandemic, already forgotten, at which it seemed that American workers had finally grasped the reins of power, with wage gains rising and organizing strength entering a new era.

The moment is forgotten today because whatever leverage labor thought it had acquired evaporated rapidly. And recently it has been scraping along the bottom.

Just this month, the government reported that labor share—”the fraction of economic output that accrues to workers,” as the Bureau of Labor Statistics defines it—reached 52.8% in the second quarter of this year. That’s the lowest level the BLS has recorded since it started taking the measurement, in 1947.

The labor share is a symptom of worker anxiety, of course, not the cause. But as a symptom it speaks volumes. It reflects growing wealth inequality, a tax system that comes down hard on wages but gives capital earnings a pass, an explosive growth in corporate profits and a shift of employment from large-scale manufacturing to gig-provided services.

Juxtaposing the labor share with corporate profits tells the full story: Since the first quarter of 2001, according to the BLS and the Bureau of Economic Analysis, after-tax corporate profits have risen nearly eight-fold while the labor share has declined by nearly 18%.

Labor share can be defined in many different ways, economists point out. But most agree that however it’s defined, its shrinkage is unmistakable. Through almost the entirety of the postwar period, up to the turn of the last century, the labor share hovered between about 62% and 65%, or roughly two-thirds of economic output.

It remained stable, observed economist Roc Armenter of the Federal Reserve Bank of Philadelphia in a 2015 paper, “through expansions, recessions, high and low inflation, and the long transition from an economy primarily based on manufacturing to one mainly centered on services.”

Indeed, that stability dated back to the prewar period, prompting economist John Maynard Keynes to describe it in 1936 as “a bit of a miracle.” Keynes’ quip has been turned on its head in recent years—Armenter titled his paper “A Bit of a Miracle No More.”

The labor share is often a useful indicator of the economic condition of the working class. The BLS reports that the percentage declined sharply during and after the 2001 and 2007-2009 recessions, but rose to nearly 59% in 2020, when the pandemic suppressed corporate profits and government assistance for workers spiked. After that, however, it resumed an almost unbroken trend downward.

The downdraft has picked up the pace. After rising to a recent peak of 55.3% in the first quarter of 2025, the metric fell in every subsequent quarter. Things have only gotten worse for workers since the beginning of this year, due in part to inflation triggered by President Trump’s tariffs and spending on his war with Iran.

Hourly wages in the private non-farm sector increased in August by 10 cents, or 0.3%, over the previous month, and gained 3.1% on the year, according to the BLS. But those gains disappeared into the maw of inflation, which rose by 0.4% in August and by 3.4% since Jan. 1. If workers feel that they’re moving backwards, in other words, it’s not their imagination.

The new era of worker power that labor advocates proclaimed as the pandemic ebbed was something of a chimera. They based their optimism on a surge of successful union organizing drives at Starbucks stores, a hint of union interest at Amazon warehouses and higher minimum wages in cities and states across the country. Workers experienced a wave of mobility as demand outpaced labor supply.

“The labor market is experiencing a Great Upgrade,” the progressive Roosevelt Institute declared. The euphoria continued into 2022. “We’re in a moment where, politically, workers are ascendant,” David Madland of the Center for American Progress, a liberal think tank, told the investment publication Barron’s in May that year. (The article’s headline read: “How Workers Gained an Edge — and Why They Won’t Lose It Soon.”)

Some labor economists were less sanguine. Even the advances up to then still left miles to travel before the American working class recovered all the economic standing it had lost since the 1970s, observed Teresa Ghilarducci of the New School.

“A lot of the talk about labor having power is based on organizing efforts at Starbucks and Amazon,” Ghilarducci told me in 2022. Of 11 economic indicators she examined, she said, “most indicators show either declining labor power or give mixed signals.”

This was a period in which policy-makers were committed to an economic doctrine that saw employment and inflation moving in lockstep—that the only way to bring down inflation was to increase unemployment. That was a disquieting pointer to Federal Reserve Board policy, for the central bank counted controlling inflation, not enduring full employment, as one of its mandates.

Then-Fed Chairman Jerome H. Powell explicitly stated that unemployment had to rise for inflation to come down. “The labor market has remained extremely tight,” Powell said at a September 2022 news conference to explain the Fed’s decision to raise interest rates by three-quarters of a percentage point for the third time in a row.

As evidence for the tight labor market, Powell cited “the unemployment rate near a 50-year low, job vacancies near historical highs, and wage growth elevated … with demand for workers substantially exceeding the supply of available workers.” He concluded, with evident regret, “So far, there’s only modest evidence that the labor market is cooling off.”

Labor share isn’t universally favored as an economic indicator. That’s because it can be hard to distinguish labor income from investment income, especially as more workers become proprietors of their own businesses—do the earnings of Uber or Lyft drivers count as labor income, or the product of their investments in their car, their gas, their insurance and all the other spending they incur before accepting their passenger?

Wage income, moreover, isn’t just a key to middle- or working-class economics. The pattern has been skewed by higher incomes collected by those in the higher echelons of wage workers, like corporate chief executives, entertainers and professional athletes. By convention, much of their income gets counted in the labor share.

“It’s true that the typical worker has seen their share of the pie fall,” observed liberal economist Dean Baker of the Center for Economic and Policy Research, “but this is mostly from upward redistribution within the wage distribution. A much larger share of wage income is going to high-end earners, such as CEOS and other top execs, Wall Street types, well-situated STEM workers and protected professionals like doctors and dentists.”

Other liberal economists disdain labor share as a useful metric, or see it as a distraction from sober policy analysis. What’s important, wrote Jared Bernstein, the former top economic adviser to President Biden, is pushing for full employment, because that’s what gives workers the ability to fight the accumulation of political power in the hands of the 1%, or even the 0.1%.

“Social and economic justice,” Bernstein wrote in May, “remain a struggle for the political power that creates the opportunity for a fairer distribution of our economy’s prodigious wealth, income, and most importantly, opportunity.”

That’s amounts to a fight against the so-called K-shaped economy, in which the rich thrive and everyone else struggles.

“Since 2023, wealth has increased the most for high-income households, while inflation has risen the most for low-income households, with both factors helping explain the fact that real retail spending rose the most for high-income households,” wrote researchers at the New York Federal Reserve Bank this spring.

We shouldn’t let the debate about how to measure the labor share divert us from keeping our eye on the economic ball. It’s a signpost to the uneven distribution of income and wealth in America, but not the only one. Worker power has been declining since the pandemic. That trend has accelerated since the Trump administration has eviscerated agencies tasked with protecting worker rights such as the Department of Labor and the National Labor Relations Board, gifted wealthier wage-earners and investors with tax cuts and imposed an inflation tax on ordinary Americans.

Nor should we ignore labor share, however. In its raw form, it’s a measure of political power, and what it shows is that workers are losing and corporate interests are winning the battle. That’s what should concern us.

There was a brief moment at the tail end of the pandemic, already forgotten, at which it seemed that American workers had finally grasped the reins of power, with wage gains rising and organizing strength entering a new era.

The moment is forgotten today because whatever leverage labor thought it had acquired evaporated rapidly. And recently it has been scraping along the bottom.

Just this month, the government reported that labor share—”the fraction of economic output that accrues to workers,” as the Bureau of Labor Statistics defines it—reached 52.8% in the second quarter of this year. That’s the lowest level the BLS has recorded since it started taking the measurement, in 1947.

The labor share is a symptom of worker anxiety, of course, not the cause. But as a symptom it speaks volumes. It reflects growing wealth inequality, a tax system that comes down hard on wages but gives capital earnings a pass, an explosive growth in corporate profits and a shift of employment from large-scale manufacturing to gig-provided services.

Juxtaposing the labor share with corporate profits tells the full story: Since the first quarter of 2001, according to the BLS and the Bureau of Economic Analysis, after-tax corporate profits have risen nearly eight-fold while the labor share has declined by nearly 18%.

Labor share can be defined in many different ways, economists point out. But most agree that however it’s defined, its shrinkage is unmistakable. Through almost the entirety of the postwar period, up to the turn of the last century, the labor share hovered between about 62% and 65%, or roughly two-thirds of economic output.

It remained stable, observed economist Roc Armenter of the Federal Reserve Bank of Philadelphia in a 2015 paper, “through expansions, recessions, high and low inflation, and the long transition from an economy primarily based on manufacturing to one mainly centered on services.”

Indeed, that stability dated back to the prewar period, prompting economist John Maynard Keynes to describe it in 1936 as “a bit of a miracle.” Keynes’ quip has been turned on its head in recent years—Armenter titled his paper “A Bit of a Miracle No More.”

The labor share is often a useful indicator of the economic condition of the working class. The BLS reports that the percentage declined sharply during and after the 2001 and 2007-2009 recessions, but rose to nearly 59% in 2020, when the pandemic suppressed corporate profits and government assistance for workers spiked. After that, however, it resumed an almost unbroken trend downward.

The downdraft has picked up the pace. After rising to a recent peak of 55.3% in the first quarter of 2025, the metric fell in every subsequent quarter. Things have only gotten worse for workers since the beginning of this year, due in part to inflation triggered by President Trump’s tariffs and spending on his war with Iran.

Hourly wages in the private non-farm sector increased in August by 10 cents, or 0.3%, over the previous month, and gained 3.1% on the year, according to the BLS. But those gains disappeared into the maw of inflation, which rose by 0.4% in August and by 3.4% since Jan. 1. If workers feel that they’re moving backwards, in other words, it’s not their imagination.

The new era of worker power that labor advocates proclaimed as the pandemic ebbed was something of a chimera. They based their optimism on a surge of successful union organizing drives at Starbucks stores, a hint of union interest at Amazon warehouses and higher minimum wages in cities and states across the country. Workers experienced a wave of mobility as demand outpaced labor supply.

“The labor market is experiencing a Great Upgrade,” the progressive Roosevelt Institute declared. The euphoria continued into 2022. “We’re in a moment where, politically, workers are ascendant,” David Madland of the Center for American Progress, a liberal think tank, told the investment publication Barron’s in May that year. (The article’s headline read: “How Workers Gained an Edge — and Why They Won’t Lose It Soon.”)

Some labor economists were less sanguine. Even the advances up to then still left miles to travel before the American working class recovered all the economic standing it had lost since the 1970s, observed Teresa Ghilarducci of the New School.

“A lot of the talk about labor having power is based on organizing efforts at Starbucks and Amazon,” Ghilarducci told me in 2022. Of 11 economic indicators she examined, she said, “most indicators show either declining labor power or give mixed signals.”

This was a period in which policy-makers were committed to an economic doctrine that saw employment and inflation moving in lockstep—that the only way to bring down inflation was to increase unemployment. That was a disquieting pointer to Federal Reserve Board policy, for the central bank counted controlling inflation, not enduring full employment, as one of its mandates.

Then-Fed Chairman Jerome H. Powell explicitly stated that unemployment had to rise for inflation to come down. “The labor market has remained extremely tight,” Powell said at a September 2022 news conference to explain the Fed’s decision to raise interest rates by three-quarters of a percentage point for the third time in a row.

As evidence for the tight labor market, Powell cited “the unemployment rate near a 50-year low, job vacancies near historical highs, and wage growth elevated … with demand for workers substantially exceeding the supply of available workers.” He concluded, with evident regret, “So far, there’s only modest evidence that the labor market is cooling off.”

Labor share isn’t universally favored as an economic indicator. That’s because it can be hard to distinguish labor income from investment income, especially as more workers become proprietors of their own businesses—do the earnings of Uber or Lyft drivers count as labor income, or the product of their investments in their car, their gas, their insurance and all the other spending they incur before accepting their passenger?

Wage income, moreover, isn’t just a key to middle- or working-class economics. The pattern has been skewed by higher incomes collected by those in the higher echelons of wage workers, like corporate chief executives, entertainers and professional athletes. By convention, much of their income gets counted in the labor share.

“It’s true that the typical worker has seen their share of the pie fall,” observed liberal economist Dean Baker of the Center for Economic and Policy Research, “but this is mostly from upward redistribution within the wage distribution. A much larger share of wage income is going to high-end earners, such as CEOS and other top execs, Wall Street types, well-situated STEM workers and protected professionals like doctors and dentists.”

Other liberal economists disdain labor share as a useful metric, or see it as a distraction from sober policy analysis. What’s important, wrote Jared Bernstein, the former top economic adviser to President Biden, is pushing for full employment, because that’s what gives workers the ability to fight the accumulation of political power in the hands of the 1%, or even the 0.1%.

“Social and economic justice,” Bernstein wrote in May, “remain a struggle for the political power that creates the opportunity for a fairer distribution of our economy’s prodigious wealth, income, and most importantly, opportunity.”

That’s amounts to a fight against the so-called K-shaped economy, in which the rich thrive and everyone else struggles.

“Since 2023, wealth has increased the most for high-income households, while inflation has risen the most for low-income households, with both factors helping explain the fact that real retail spending rose the most for high-income households,” wrote researchers at the New York Federal Reserve Bank this spring.

We shouldn’t let the debate about how to measure the labor share divert us from keeping our eye on the economic ball. It’s a signpost to the uneven distribution of income and wealth in America, but not the only one. Worker power has been declining since the pandemic. That trend has accelerated since the Trump administration has eviscerated agencies tasked with protecting worker rights such as the Department of Labor and the National Labor Relations Board, gifted wealthier wage-earners and investors with tax cuts and imposed an inflation tax on ordinary Americans.

Nor should we ignore labor share, however. In its raw form, it’s a measure of political power, and what it shows is that workers are losing and corporate interests are winning the battle. That’s what should concern us.

There was a brief moment at the tail end of the pandemic, already forgotten, at which it seemed that American workers had finally grasped the reins of power, with wage gains rising and organizing strength entering a new era.

The moment is forgotten today because whatever leverage labor thought it had acquired evaporated rapidly. And recently it has been scraping along the bottom.

Just this month, the government reported that labor share—”the fraction of economic output that accrues to workers,” as the Bureau of Labor Statistics defines it—reached 52.8% in the second quarter of this year. That’s the lowest level the BLS has recorded since it started taking the measurement, in 1947.

The labor share is a symptom of worker anxiety, of course, not the cause. But as a symptom it speaks volumes. It reflects growing wealth inequality, a tax system that comes down hard on wages but gives capital earnings a pass, an explosive growth in corporate profits and a shift of employment from large-scale manufacturing to gig-provided services.

Juxtaposing the labor share with corporate profits tells the full story: Since the first quarter of 2001, according to the BLS and the Bureau of Economic Analysis, after-tax corporate profits have risen nearly eight-fold while the labor share has declined by nearly 18%.

Labor share can be defined in many different ways, economists point out. But most agree that however it’s defined, its shrinkage is unmistakable. Through almost the entirety of the postwar period, up to the turn of the last century, the labor share hovered between about 62% and 65%, or roughly two-thirds of economic output.

It remained stable, observed economist Roc Armenter of the Federal Reserve Bank of Philadelphia in a 2015 paper, “through expansions, recessions, high and low inflation, and the long transition from an economy primarily based on manufacturing to one mainly centered on services.”

Indeed, that stability dated back to the prewar period, prompting economist John Maynard Keynes to describe it in 1936 as “a bit of a miracle.” Keynes’ quip has been turned on its head in recent years—Armenter titled his paper “A Bit of a Miracle No More.”

The labor share is often a useful indicator of the economic condition of the working class. The BLS reports that the percentage declined sharply during and after the 2001 and 2007-2009 recessions, but rose to nearly 59% in 2020, when the pandemic suppressed corporate profits and government assistance for workers spiked. After that, however, it resumed an almost unbroken trend downward.

The downdraft has picked up the pace. After rising to a recent peak of 55.3% in the first quarter of 2025, the metric fell in every subsequent quarter. Things have only gotten worse for workers since the beginning of this year, due in part to inflation triggered by President Trump’s tariffs and spending on his war with Iran.

Hourly wages in the private non-farm sector increased in August by 10 cents, or 0.3%, over the previous month, and gained 3.1% on the year, according to the BLS. But those gains disappeared into the maw of inflation, which rose by 0.4% in August and by 3.4% since Jan. 1. If workers feel that they’re moving backwards, in other words, it’s not their imagination.

The new era of worker power that labor advocates proclaimed as the pandemic ebbed was something of a chimera. They based their optimism on a surge of successful union organizing drives at Starbucks stores, a hint of union interest at Amazon warehouses and higher minimum wages in cities and states across the country. Workers experienced a wave of mobility as demand outpaced labor supply.

“The labor market is experiencing a Great Upgrade,” the progressive Roosevelt Institute declared. The euphoria continued into 2022. “We’re in a moment where, politically, workers are ascendant,” David Madland of the Center for American Progress, a liberal think tank, told the investment publication Barron’s in May that year. (The article’s headline read: “How Workers Gained an Edge — and Why They Won’t Lose It Soon.”)

Some labor economists were less sanguine. Even the advances up to then still left miles to travel before the American working class recovered all the economic standing it had lost since the 1970s, observed Teresa Ghilarducci of the New School.

“A lot of the talk about labor having power is based on organizing efforts at Starbucks and Amazon,” Ghilarducci told me in 2022. Of 11 economic indicators she examined, she said, “most indicators show either declining labor power or give mixed signals.”

This was a period in which policy-makers were committed to an economic doctrine that saw employment and inflation moving in lockstep—that the only way to bring down inflation was to increase unemployment. That was a disquieting pointer to Federal Reserve Board policy, for the central bank counted controlling inflation, not enduring full employment, as one of its mandates.

Then-Fed Chairman Jerome H. Powell explicitly stated that unemployment had to rise for inflation to come down. “The labor market has remained extremely tight,” Powell said at a September 2022 news conference to explain the Fed’s decision to raise interest rates by three-quarters of a percentage point for the third time in a row.

As evidence for the tight labor market, Powell cited “the unemployment rate near a 50-year low, job vacancies near historical highs, and wage growth elevated … with demand for workers substantially exceeding the supply of available workers.” He concluded, with evident regret, “So far, there’s only modest evidence that the labor market is cooling off.”

Labor share isn’t universally favored as an economic indicator. That’s because it can be hard to distinguish labor income from investment income, especially as more workers become proprietors of their own businesses—do the earnings of Uber or Lyft drivers count as labor income, or the product of their investments in their car, their gas, their insurance and all the other spending they incur before accepting their passenger?

Wage income, moreover, isn’t just a key to middle- or working-class economics. The pattern has been skewed by higher incomes collected by those in the higher echelons of wage workers, like corporate chief executives, entertainers and professional athletes. By convention, much of their income gets counted in the labor share.

“It’s true that the typical worker has seen their share of the pie fall,” observed liberal economist Dean Baker of the Center for Economic and Policy Research, “but this is mostly from upward redistribution within the wage distribution. A much larger share of wage income is going to high-end earners, such as CEOS and other top execs, Wall Street types, well-situated STEM workers and protected professionals like doctors and dentists.”

Other liberal economists disdain labor share as a useful metric, or see it as a distraction from sober policy analysis. What’s important, wrote Jared Bernstein, the former top economic adviser to President Biden, is pushing for full employment, because that’s what gives workers the ability to fight the accumulation of political power in the hands of the 1%, or even the 0.1%.

“Social and economic justice,” Bernstein wrote in May, “remain a struggle for the political power that creates the opportunity for a fairer distribution of our economy’s prodigious wealth, income, and most importantly, opportunity.”

That’s amounts to a fight against the so-called K-shaped economy, in which the rich thrive and everyone else struggles.

“Since 2023, wealth has increased the most for high-income households, while inflation has risen the most for low-income households, with both factors helping explain the fact that real retail spending rose the most for high-income households,” wrote researchers at the New York Federal Reserve Bank this spring.

We shouldn’t let the debate about how to measure the labor share divert us from keeping our eye on the economic ball. It’s a signpost to the uneven distribution of income and wealth in America, but not the only one. Worker power has been declining since the pandemic. That trend has accelerated since the Trump administration has eviscerated agencies tasked with protecting worker rights such as the Department of Labor and the National Labor Relations Board, gifted wealthier wage-earners and investors with tax cuts and imposed an inflation tax on ordinary Americans.

Nor should we ignore labor share, however. In its raw form, it’s a measure of political power, and what it shows is that workers are losing and corporate interests are winning the battle. That’s what should concern us.

There was a brief moment at the tail end of the pandemic, already forgotten, at which it seemed that American workers had finally grasped the reins of power, with wage gains rising and organizing strength entering a new era.

The moment is forgotten today because whatever leverage labor thought it had acquired evaporated rapidly. And recently it has been scraping along the bottom.

Just this month, the government reported that labor share—”the fraction of economic output that accrues to workers,” as the Bureau of Labor Statistics defines it—reached 52.8% in the second quarter of this year. That’s the lowest level the BLS has recorded since it started taking the measurement, in 1947.

The labor share is a symptom of worker anxiety, of course, not the cause. But as a symptom it speaks volumes. It reflects growing wealth inequality, a tax system that comes down hard on wages but gives capital earnings a pass, an explosive growth in corporate profits and a shift of employment from large-scale manufacturing to gig-provided services.

Juxtaposing the labor share with corporate profits tells the full story: Since the first quarter of 2001, according to the BLS and the Bureau of Economic Analysis, after-tax corporate profits have risen nearly eight-fold while the labor share has declined by nearly 18%.

Labor share can be defined in many different ways, economists point out. But most agree that however it’s defined, its shrinkage is unmistakable. Through almost the entirety of the postwar period, up to the turn of the last century, the labor share hovered between about 62% and 65%, or roughly two-thirds of economic output.

It remained stable, observed economist Roc Armenter of the Federal Reserve Bank of Philadelphia in a 2015 paper, “through expansions, recessions, high and low inflation, and the long transition from an economy primarily based on manufacturing to one mainly centered on services.”

Indeed, that stability dated back to the prewar period, prompting economist John Maynard Keynes to describe it in 1936 as “a bit of a miracle.” Keynes’ quip has been turned on its head in recent years—Armenter titled his paper “A Bit of a Miracle No More.”

The labor share is often a useful indicator of the economic condition of the working class. The BLS reports that the percentage declined sharply during and after the 2001 and 2007-2009 recessions, but rose to nearly 59% in 2020, when the pandemic suppressed corporate profits and government assistance for workers spiked. After that, however, it resumed an almost unbroken trend downward.

The downdraft has picked up the pace. After rising to a recent peak of 55.3% in the first quarter of 2025, the metric fell in every subsequent quarter. Things have only gotten worse for workers since the beginning of this year, due in part to inflation triggered by President Trump’s tariffs and spending on his war with Iran.

Hourly wages in the private non-farm sector increased in August by 10 cents, or 0.3%, over the previous month, and gained 3.1% on the year, according to the BLS. But those gains disappeared into the maw of inflation, which rose by 0.4% in August and by 3.4% since Jan. 1. If workers feel that they’re moving backwards, in other words, it’s not their imagination.

The new era of worker power that labor advocates proclaimed as the pandemic ebbed was something of a chimera. They based their optimism on a surge of successful union organizing drives at Starbucks stores, a hint of union interest at Amazon warehouses and higher minimum wages in cities and states across the country. Workers experienced a wave of mobility as demand outpaced labor supply.

“The labor market is experiencing a Great Upgrade,” the progressive Roosevelt Institute declared. The euphoria continued into 2022. “We’re in a moment where, politically, workers are ascendant,” David Madland of the Center for American Progress, a liberal think tank, told the investment publication Barron’s in May that year. (The article’s headline read: “How Workers Gained an Edge — and Why They Won’t Lose It Soon.”)

Some labor economists were less sanguine. Even the advances up to then still left miles to travel before the American working class recovered all the economic standing it had lost since the 1970s, observed Teresa Ghilarducci of the New School.

“A lot of the talk about labor having power is based on organizing efforts at Starbucks and Amazon,” Ghilarducci told me in 2022. Of 11 economic indicators she examined, she said, “most indicators show either declining labor power or give mixed signals.”

This was a period in which policy-makers were committed to an economic doctrine that saw employment and inflation moving in lockstep—that the only way to bring down inflation was to increase unemployment. That was a disquieting pointer to Federal Reserve Board policy, for the central bank counted controlling inflation, not enduring full employment, as one of its mandates.

Then-Fed Chairman Jerome H. Powell explicitly stated that unemployment had to rise for inflation to come down. “The labor market has remained extremely tight,” Powell said at a September 2022 news conference to explain the Fed’s decision to raise interest rates by three-quarters of a percentage point for the third time in a row.

As evidence for the tight labor market, Powell cited “the unemployment rate near a 50-year low, job vacancies near historical highs, and wage growth elevated … with demand for workers substantially exceeding the supply of available workers.” He concluded, with evident regret, “So far, there’s only modest evidence that the labor market is cooling off.”

Labor share isn’t universally favored as an economic indicator. That’s because it can be hard to distinguish labor income from investment income, especially as more workers become proprietors of their own businesses—do the earnings of Uber or Lyft drivers count as labor income, or the product of their investments in their car, their gas, their insurance and all the other spending they incur before accepting their passenger?

Wage income, moreover, isn’t just a key to middle- or working-class economics. The pattern has been skewed by higher incomes collected by those in the higher echelons of wage workers, like corporate chief executives, entertainers and professional athletes. By convention, much of their income gets counted in the labor share.

“It’s true that the typical worker has seen their share of the pie fall,” observed liberal economist Dean Baker of the Center for Economic and Policy Research, “but this is mostly from upward redistribution within the wage distribution. A much larger share of wage income is going to high-end earners, such as CEOS and other top execs, Wall Street types, well-situated STEM workers and protected professionals like doctors and dentists.”

Other liberal economists disdain labor share as a useful metric, or see it as a distraction from sober policy analysis. What’s important, wrote Jared Bernstein, the former top economic adviser to President Biden, is pushing for full employment, because that’s what gives workers the ability to fight the accumulation of political power in the hands of the 1%, or even the 0.1%.

“Social and economic justice,” Bernstein wrote in May, “remain a struggle for the political power that creates the opportunity for a fairer distribution of our economy’s prodigious wealth, income, and most importantly, opportunity.”

That’s amounts to a fight against the so-called K-shaped economy, in which the rich thrive and everyone else struggles.

“Since 2023, wealth has increased the most for high-income households, while inflation has risen the most for low-income households, with both factors helping explain the fact that real retail spending rose the most for high-income households,” wrote researchers at the New York Federal Reserve Bank this spring.

We shouldn’t let the debate about how to measure the labor share divert us from keeping our eye on the economic ball. It’s a signpost to the uneven distribution of income and wealth in America, but not the only one. Worker power has been declining since the pandemic. That trend has accelerated since the Trump administration has eviscerated agencies tasked with protecting worker rights such as the Department of Labor and the National Labor Relations Board, gifted wealthier wage-earners and investors with tax cuts and imposed an inflation tax on ordinary Americans.

Nor should we ignore labor share, however. In its raw form, it’s a measure of political power, and what it shows is that workers are losing and corporate interests are winning the battle. That’s what should concern us.

There was a brief moment at the tail end of the pandemic, already forgotten, at which it seemed that American workers had finally grasped the reins of power, with wage gains rising and organizing strength entering a new era.

The moment is forgotten today because whatever leverage labor thought it had acquired evaporated rapidly. And recently it has been scraping along the bottom.

Just this month, the government reported that labor share—”the fraction of economic output that accrues to workers,” as the Bureau of Labor Statistics defines it—reached 52.8% in the second quarter of this year. That’s the lowest level the BLS has recorded since it started taking the measurement, in 1947.

The labor share is a symptom of worker anxiety, of course, not the cause. But as a symptom it speaks volumes. It reflects growing wealth inequality, a tax system that comes down hard on wages but gives capital earnings a pass, an explosive growth in corporate profits and a shift of employment from large-scale manufacturing to gig-provided services.

Juxtaposing the labor share with corporate profits tells the full story: Since the first quarter of 2001, according to the BLS and the Bureau of Economic Analysis, after-tax corporate profits have risen nearly eight-fold while the labor share has declined by nearly 18%.

Labor share can be defined in many different ways, economists point out. But most agree that however it’s defined, its shrinkage is unmistakable. Through almost the entirety of the postwar period, up to the turn of the last century, the labor share hovered between about 62% and 65%, or roughly two-thirds of economic output.

It remained stable, observed economist Roc Armenter of the Federal Reserve Bank of Philadelphia in a 2015 paper, “through expansions, recessions, high and low inflation, and the long transition from an economy primarily based on manufacturing to one mainly centered on services.”

Indeed, that stability dated back to the prewar period, prompting economist John Maynard Keynes to describe it in 1936 as “a bit of a miracle.” Keynes’ quip has been turned on its head in recent years—Armenter titled his paper “A Bit of a Miracle No More.”

The labor share is often a useful indicator of the economic condition of the working class. The BLS reports that the percentage declined sharply during and after the 2001 and 2007-2009 recessions, but rose to nearly 59% in 2020, when the pandemic suppressed corporate profits and government assistance for workers spiked. After that, however, it resumed an almost unbroken trend downward.

The downdraft has picked up the pace. After rising to a recent peak of 55.3% in the first quarter of 2025, the metric fell in every subsequent quarter. Things have only gotten worse for workers since the beginning of this year, due in part to inflation triggered by President Trump’s tariffs and spending on his war with Iran.

Hourly wages in the private non-farm sector increased in August by 10 cents, or 0.3%, over the previous month, and gained 3.1% on the year, according to the BLS. But those gains disappeared into the maw of inflation, which rose by 0.4% in August and by 3.4% since Jan. 1. If workers feel that they’re moving backwards, in other words, it’s not their imagination.

The new era of worker power that labor advocates proclaimed as the pandemic ebbed was something of a chimera. They based their optimism on a surge of successful union organizing drives at Starbucks stores, a hint of union interest at Amazon warehouses and higher minimum wages in cities and states across the country. Workers experienced a wave of mobility as demand outpaced labor supply.

“The labor market is experiencing a Great Upgrade,” the progressive Roosevelt Institute declared. The euphoria continued into 2022. “We’re in a moment where, politically, workers are ascendant,” David Madland of the Center for American Progress, a liberal think tank, told the investment publication Barron’s in May that year. (The article’s headline read: “How Workers Gained an Edge — and Why They Won’t Lose It Soon.”)

Some labor economists were less sanguine. Even the advances up to then still left miles to travel before the American working class recovered all the economic standing it had lost since the 1970s, observed Teresa Ghilarducci of the New School.

“A lot of the talk about labor having power is based on organizing efforts at Starbucks and Amazon,” Ghilarducci told me in 2022. Of 11 economic indicators she examined, she said, “most indicators show either declining labor power or give mixed signals.”

This was a period in which policy-makers were committed to an economic doctrine that saw employment and inflation moving in lockstep—that the only way to bring down inflation was to increase unemployment. That was a disquieting pointer to Federal Reserve Board policy, for the central bank counted controlling inflation, not enduring full employment, as one of its mandates.

Then-Fed Chairman Jerome H. Powell explicitly stated that unemployment had to rise for inflation to come down. “The labor market has remained extremely tight,” Powell said at a September 2022 news conference to explain the Fed’s decision to raise interest rates by three-quarters of a percentage point for the third time in a row.

As evidence for the tight labor market, Powell cited “the unemployment rate near a 50-year low, job vacancies near historical highs, and wage growth elevated … with demand for workers substantially exceeding the supply of available workers.” He concluded, with evident regret, “So far, there’s only modest evidence that the labor market is cooling off.”

Labor share isn’t universally favored as an economic indicator. That’s because it can be hard to distinguish labor income from investment income, especially as more workers become proprietors of their own businesses—do the earnings of Uber or Lyft drivers count as labor income, or the product of their investments in their car, their gas, their insurance and all the other spending they incur before accepting their passenger?

Wage income, moreover, isn’t just a key to middle- or working-class economics. The pattern has been skewed by higher incomes collected by those in the higher echelons of wage workers, like corporate chief executives, entertainers and professional athletes. By convention, much of their income gets counted in the labor share.

“It’s true that the typical worker has seen their share of the pie fall,” observed liberal economist Dean Baker of the Center for Economic and Policy Research, “but this is mostly from upward redistribution within the wage distribution. A much larger share of wage income is going to high-end earners, such as CEOS and other top execs, Wall Street types, well-situated STEM workers and protected professionals like doctors and dentists.”

Other liberal economists disdain labor share as a useful metric, or see it as a distraction from sober policy analysis. What’s important, wrote Jared Bernstein, the former top economic adviser to President Biden, is pushing for full employment, because that’s what gives workers the ability to fight the accumulation of political power in the hands of the 1%, or even the 0.1%.

“Social and economic justice,” Bernstein wrote in May, “remain a struggle for the political power that creates the opportunity for a fairer distribution of our economy’s prodigious wealth, income, and most importantly, opportunity.”

That’s amounts to a fight against the so-called K-shaped economy, in which the rich thrive and everyone else struggles.

“Since 2023, wealth has increased the most for high-income households, while inflation has risen the most for low-income households, with both factors helping explain the fact that real retail spending rose the most for high-income households,” wrote researchers at the New York Federal Reserve Bank this spring.

We shouldn’t let the debate about how to measure the labor share divert us from keeping our eye on the economic ball. It’s a signpost to the uneven distribution of income and wealth in America, but not the only one. Worker power has been declining since the pandemic. That trend has accelerated since the Trump administration has eviscerated agencies tasked with protecting worker rights such as the Department of Labor and the National Labor Relations Board, gifted wealthier wage-earners and investors with tax cuts and imposed an inflation tax on ordinary Americans.

Nor should we ignore labor share, however. In its raw form, it’s a measure of political power, and what it shows is that workers are losing and corporate interests are winning the battle. That’s what should concern us.

There was a brief moment at the tail end of the pandemic, already forgotten, at which it seemed that American workers had finally grasped the reins of power, with wage gains rising and organizing strength entering a new era.

The moment is forgotten today because whatever leverage labor thought it had acquired evaporated rapidly. And recently it has been scraping along the bottom.

Just this month, the government reported that labor share—”the fraction of economic output that accrues to workers,” as the Bureau of Labor Statistics defines it—reached 52.8% in the second quarter of this year. That’s the lowest level the BLS has recorded since it started taking the measurement, in 1947.

The labor share is a symptom of worker anxiety, of course, not the cause. But as a symptom it speaks volumes. It reflects growing wealth inequality, a tax system that comes down hard on wages but gives capital earnings a pass, an explosive growth in corporate profits and a shift of employment from large-scale manufacturing to gig-provided services.

Juxtaposing the labor share with corporate profits tells the full story: Since the first quarter of 2001, according to the BLS and the Bureau of Economic Analysis, after-tax corporate profits have risen nearly eight-fold while the labor share has declined by nearly 18%.

Labor share can be defined in many different ways, economists point out. But most agree that however it’s defined, its shrinkage is unmistakable. Through almost the entirety of the postwar period, up to the turn of the last century, the labor share hovered between about 62% and 65%, or roughly two-thirds of economic output.

It remained stable, observed economist Roc Armenter of the Federal Reserve Bank of Philadelphia in a 2015 paper, “through expansions, recessions, high and low inflation, and the long transition from an economy primarily based on manufacturing to one mainly centered on services.”

Indeed, that stability dated back to the prewar period, prompting economist John Maynard Keynes to describe it in 1936 as “a bit of a miracle.” Keynes’ quip has been turned on its head in recent years—Armenter titled his paper “A Bit of a Miracle No More.”

The labor share is often a useful indicator of the economic condition of the working class. The BLS reports that the percentage declined sharply during and after the 2001 and 2007-2009 recessions, but rose to nearly 59% in 2020, when the pandemic suppressed corporate profits and government assistance for workers spiked. After that, however, it resumed an almost unbroken trend downward.

The downdraft has picked up the pace. After rising to a recent peak of 55.3% in the first quarter of 2025, the metric fell in every subsequent quarter. Things have only gotten worse for workers since the beginning of this year, due in part to inflation triggered by President Trump’s tariffs and spending on his war with Iran.

Hourly wages in the private non-farm sector increased in August by 10 cents, or 0.3%, over the previous month, and gained 3.1% on the year, according to the BLS. But those gains disappeared into the maw of inflation, which rose by 0.4% in August and by 3.4% since Jan. 1. If workers feel that they’re moving backwards, in other words, it’s not their imagination.

The new era of worker power that labor advocates proclaimed as the pandemic ebbed was something of a chimera. They based their optimism on a surge of successful union organizing drives at Starbucks stores, a hint of union interest at Amazon warehouses and higher minimum wages in cities and states across the country. Workers experienced a wave of mobility as demand outpaced labor supply.

“The labor market is experiencing a Great Upgrade,” the progressive Roosevelt Institute declared. The euphoria continued into 2022. “We’re in a moment where, politically, workers are ascendant,” David Madland of the Center for American Progress, a liberal think tank, told the investment publication Barron’s in May that year. (The article’s headline read: “How Workers Gained an Edge — and Why They Won’t Lose It Soon.”)

Some labor economists were less sanguine. Even the advances up to then still left miles to travel before the American working class recovered all the economic standing it had lost since the 1970s, observed Teresa Ghilarducci of the New School.

“A lot of the talk about labor having power is based on organizing efforts at Starbucks and Amazon,” Ghilarducci told me in 2022. Of 11 economic indicators she examined, she said, “most indicators show either declining labor power or give mixed signals.”

This was a period in which policy-makers were committed to an economic doctrine that saw employment and inflation moving in lockstep—that the only way to bring down inflation was to increase unemployment. That was a disquieting pointer to Federal Reserve Board policy, for the central bank counted controlling inflation, not enduring full employment, as one of its mandates.

Then-Fed Chairman Jerome H. Powell explicitly stated that unemployment had to rise for inflation to come down. “The labor market has remained extremely tight,” Powell said at a September 2022 news conference to explain the Fed’s decision to raise interest rates by three-quarters of a percentage point for the third time in a row.

As evidence for the tight labor market, Powell cited “the unemployment rate near a 50-year low, job vacancies near historical highs, and wage growth elevated … with demand for workers substantially exceeding the supply of available workers.” He concluded, with evident regret, “So far, there’s only modest evidence that the labor market is cooling off.”

Labor share isn’t universally favored as an economic indicator. That’s because it can be hard to distinguish labor income from investment income, especially as more workers become proprietors of their own businesses—do the earnings of Uber or Lyft drivers count as labor income, or the product of their investments in their car, their gas, their insurance and all the other spending they incur before accepting their passenger?

Wage income, moreover, isn’t just a key to middle- or working-class economics. The pattern has been skewed by higher incomes collected by those in the higher echelons of wage workers, like corporate chief executives, entertainers and professional athletes. By convention, much of their income gets counted in the labor share.

“It’s true that the typical worker has seen their share of the pie fall,” observed liberal economist Dean Baker of the Center for Economic and Policy Research, “but this is mostly from upward redistribution within the wage distribution. A much larger share of wage income is going to high-end earners, such as CEOS and other top execs, Wall Street types, well-situated STEM workers and protected professionals like doctors and dentists.”

Other liberal economists disdain labor share as a useful metric, or see it as a distraction from sober policy analysis. What’s important, wrote Jared Bernstein, the former top economic adviser to President Biden, is pushing for full employment, because that’s what gives workers the ability to fight the accumulation of political power in the hands of the 1%, or even the 0.1%.

“Social and economic justice,” Bernstein wrote in May, “remain a struggle for the political power that creates the opportunity for a fairer distribution of our economy’s prodigious wealth, income, and most importantly, opportunity.”

That’s amounts to a fight against the so-called K-shaped economy, in which the rich thrive and everyone else struggles.

“Since 2023, wealth has increased the most for high-income households, while inflation has risen the most for low-income households, with both factors helping explain the fact that real retail spending rose the most for high-income households,” wrote researchers at the New York Federal Reserve Bank this spring.

We shouldn’t let the debate about how to measure the labor share divert us from keeping our eye on the economic ball. It’s a signpost to the uneven distribution of income and wealth in America, but not the only one. Worker power has been declining since the pandemic. That trend has accelerated since the Trump administration has eviscerated agencies tasked with protecting worker rights such as the Department of Labor and the National Labor Relations Board, gifted wealthier wage-earners and investors with tax cuts and imposed an inflation tax on ordinary Americans.

Nor should we ignore labor share, however. In its raw form, it’s a measure of political power, and what it shows is that workers are losing and corporate interests are winning the battle. That’s what should concern us.

There was a brief moment at the tail end of the pandemic, already forgotten, at which it seemed that American workers had finally grasped the reins of power, with wage gains rising and organizing strength entering a new era.

The moment is forgotten today because whatever leverage labor thought it had acquired evaporated rapidly. And recently it has been scraping along the bottom.

Just this month, the government reported that labor share—”the fraction of economic output that accrues to workers,” as the Bureau of Labor Statistics defines it—reached 52.8% in the second quarter of this year. That’s the lowest level the BLS has recorded since it started taking the measurement, in 1947.

The labor share is a symptom of worker anxiety, of course, not the cause. But as a symptom it speaks volumes. It reflects growing wealth inequality, a tax system that comes down hard on wages but gives capital earnings a pass, an explosive growth in corporate profits and a shift of employment from large-scale manufacturing to gig-provided services.

Juxtaposing the labor share with corporate profits tells the full story: Since the first quarter of 2001, according to the BLS and the Bureau of Economic Analysis, after-tax corporate profits have risen nearly eight-fold while the labor share has declined by nearly 18%.

Labor share can be defined in many different ways, economists point out. But most agree that however it’s defined, its shrinkage is unmistakable. Through almost the entirety of the postwar period, up to the turn of the last century, the labor share hovered between about 62% and 65%, or roughly two-thirds of economic output.

It remained stable, observed economist Roc Armenter of the Federal Reserve Bank of Philadelphia in a 2015 paper, “through expansions, recessions, high and low inflation, and the long transition from an economy primarily based on manufacturing to one mainly centered on services.”

Indeed, that stability dated back to the prewar period, prompting economist John Maynard Keynes to describe it in 1936 as “a bit of a miracle.” Keynes’ quip has been turned on its head in recent years—Armenter titled his paper “A Bit of a Miracle No More.”

The labor share is often a useful indicator of the economic condition of the working class. The BLS reports that the percentage declined sharply during and after the 2001 and 2007-2009 recessions, but rose to nearly 59% in 2020, when the pandemic suppressed corporate profits and government assistance for workers spiked. After that, however, it resumed an almost unbroken trend downward.

The downdraft has picked up the pace. After rising to a recent peak of 55.3% in the first quarter of 2025, the metric fell in every subsequent quarter. Things have only gotten worse for workers since the beginning of this year, due in part to inflation triggered by President Trump’s tariffs and spending on his war with Iran.

Hourly wages in the private non-farm sector increased in August by 10 cents, or 0.3%, over the previous month, and gained 3.1% on the year, according to the BLS. But those gains disappeared into the maw of inflation, which rose by 0.4% in August and by 3.4% since Jan. 1. If workers feel that they’re moving backwards, in other words, it’s not their imagination.

The new era of worker power that labor advocates proclaimed as the pandemic ebbed was something of a chimera. They based their optimism on a surge of successful union organizing drives at Starbucks stores, a hint of union interest at Amazon warehouses and higher minimum wages in cities and states across the country. Workers experienced a wave of mobility as demand outpaced labor supply.

“The labor market is experiencing a Great Upgrade,” the progressive Roosevelt Institute declared. The euphoria continued into 2022. “We’re in a moment where, politically, workers are ascendant,” David Madland of the Center for American Progress, a liberal think tank, told the investment publication Barron’s in May that year. (The article’s headline read: “How Workers Gained an Edge — and Why They Won’t Lose It Soon.”)

Some labor economists were less sanguine. Even the advances up to then still left miles to travel before the American working class recovered all the economic standing it had lost since the 1970s, observed Teresa Ghilarducci of the New School.

“A lot of the talk about labor having power is based on organizing efforts at Starbucks and Amazon,” Ghilarducci told me in 2022. Of 11 economic indicators she examined, she said, “most indicators show either declining labor power or give mixed signals.”

This was a period in which policy-makers were committed to an economic doctrine that saw employment and inflation moving in lockstep—that the only way to bring down inflation was to increase unemployment. That was a disquieting pointer to Federal Reserve Board policy, for the central bank counted controlling inflation, not enduring full employment, as one of its mandates.

Then-Fed Chairman Jerome H. Powell explicitly stated that unemployment had to rise for inflation to come down. “The labor market has remained extremely tight,” Powell said at a September 2022 news conference to explain the Fed’s decision to raise interest rates by three-quarters of a percentage point for the third time in a row.

As evidence for the tight labor market, Powell cited “the unemployment rate near a 50-year low, job vacancies near historical highs, and wage growth elevated … with demand for workers substantially exceeding the supply of available workers.” He concluded, with evident regret, “So far, there’s only modest evidence that the labor market is cooling off.”

Labor share isn’t universally favored as an economic indicator. That’s because it can be hard to distinguish labor income from investment income, especially as more workers become proprietors of their own businesses—do the earnings of Uber or Lyft drivers count as labor income, or the product of their investments in their car, their gas, their insurance and all the other spending they incur before accepting their passenger?

Wage income, moreover, isn’t just a key to middle- or working-class economics. The pattern has been skewed by higher incomes collected by those in the higher echelons of wage workers, like corporate chief executives, entertainers and professional athletes. By convention, much of their income gets counted in the labor share.

“It’s true that the typical worker has seen their share of the pie fall,” observed liberal economist Dean Baker of the Center for Economic and Policy Research, “but this is mostly from upward redistribution within the wage distribution. A much larger share of wage income is going to high-end earners, such as CEOS and other top execs, Wall Street types, well-situated STEM workers and protected professionals like doctors and dentists.”

Other liberal economists disdain labor share as a useful metric, or see it as a distraction from sober policy analysis. What’s important, wrote Jared Bernstein, the former top economic adviser to President Biden, is pushing for full employment, because that’s what gives workers the ability to fight the accumulation of political power in the hands of the 1%, or even the 0.1%.

“Social and economic justice,” Bernstein wrote in May, “remain a struggle for the political power that creates the opportunity for a fairer distribution of our economy’s prodigious wealth, income, and most importantly, opportunity.”

That’s amounts to a fight against the so-called K-shaped economy, in which the rich thrive and everyone else struggles.

“Since 2023, wealth has increased the most for high-income households, while inflation has risen the most for low-income households, with both factors helping explain the fact that real retail spending rose the most for high-income households,” wrote researchers at the New York Federal Reserve Bank this spring.

We shouldn’t let the debate about how to measure the labor share divert us from keeping our eye on the economic ball. It’s a signpost to the uneven distribution of income and wealth in America, but not the only one. Worker power has been declining since the pandemic. That trend has accelerated since the Trump administration has eviscerated agencies tasked with protecting worker rights such as the Department of Labor and the National Labor Relations Board, gifted wealthier wage-earners and investors with tax cuts and imposed an inflation tax on ordinary Americans.

Nor should we ignore labor share, however. In its raw form, it’s a measure of political power, and what it shows is that workers are losing and corporate interests are winning the battle. That’s what should concern us.