US labour share hits record low as corporate profits climb, raising questions over how economic gains are distributed
US workers received the smallest share of the country’s economic output on record in the second quarter of 2026, according to US government data. At the same time, corporate profits rose sharply.
The figures are from the second quarter. But they have resurfaced around Labor Day because they highlight a long-running question in the US economy: how are the gains from economic growth being divided between workers and businesses?
The Bureau of Labor Statistics said labour’s share of nominal GDP fell to 52.9 per cent in the second quarter, from 53.7 per cent in the first quarter. That was the lowest level since the series began in 1947.
Productivity is rising
One factor behind the debate is productivity. US workers are producing more output per hour, but pay has not always kept pace with those gains. In the second quarter, labour productivity increased, while real compensation remained under pressure.
In July, real average hourly earnings fell 0.2 per cent from a year earlier, showing that inflation was still outpacing wage growth.
That does not mean wages are falling in dollar terms. It means their purchasing power has weakened after accounting for rising prices.
More from BusinessThe jobs market remains resilient
The record-low labour share also does not mean the US jobs market is in crisis.
US employers added 162,000 jobs in August, well above economists’ expectations, while the unemployment rate held at 4.1 per cent. Average hourly earnings rose 0.3 per cent from July.
The data show that hiring remains relatively strong even as questions persist about how the income generated by the economy is distributed.
A trend that predates AI
The decline in labour’s share is not new. Economists have linked the long-term trend to declining union membership, globalisation, outsourcing and technological change. Automation has allowed companies to increase output without adding workers at the same pace.
Artificial intelligence could reinforce that trend, but it is too early to determine how much of the recent movement can be attributed to AI.
The latest figures may also reflect temporary factors, including inflation and the economic distortions that followed the Covid-19 pandemic.
