The share of U.S. gross domestic income going to wages and salaries has slipped to roughly 43%, sitting near the lowest reading since the government started tracking the data in 1929. Corporate profits and investment income are eating a bigger slice of the pie, and the trend has been building for decades.
What the data shows
The proportion of wages and salaries in US gross domestic income is down to ~43%, near the lowest since records began in 1929. Gross domestic income measures the total income earned across the economy, including wages, corporate profits, and investment income.
The metric has been in a long-term decline since peaking at ~52% in the 1940s. Between the 1940s and the 1960s, this percentage never fell below 48%.
Why it matters for markets
A larger proportion of economic income is now flowing to corporate profits and investment income, rather than pay workers. The gap between corporate profits and labor income keeps widening.
For equity holders, that is the mechanical story behind fat margins. For consumers, it is a headwind on spending power, and eventually on demand for the goods and services those same corporates sell.
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The broader labor share picture
A parallel BLS measure that includes benefits tells the same story. The portion of US economic output that goes to workers in the form of wages and salaries plunged to the lowest level on record in the third quarter of last year, according to the Bureau of Labor Statistics. The labor share fell to 53.8% in the period, down from 54.6% in the previous quarter and an average of 55.6% in the 2020s so far.
That is despite corporate earnings skyrocketing, with profits for Fortune 500 companies hitting a record $1.87 trillion in 2024, while U.S. GDP grew 4.3% in the third quarter last year, exceeding economists’ predictions.
Workforce dynamics behind the number
Growing unemployment, which some economists expect to rise over the next few months, keeps wages down, allowing margins and profits to expand.
The most recent BLS household survey shows a decline of 881,000 foreign-born workers since January 2025, and a decline of 1.3 million workers since a March 2025 peak. A smaller labor pool combined with productivity gains keeps unit labor costs contained, which is friendly to margins but rough on wage growth.
Options market and stocks to watch
If the labor-share squeeze continues, watch names most levered to margin expansion and consumer discretionary strength:
WMT: watch for how a pressured lower-income consumer routes spend toward value retail.
COST: watch for membership and traffic trends as households ration spend.
AMZN: watch for retail margin trajectory alongside AWS as automation reshapes labor costs.
NVDA: watch for capex signals from customers substituting AI for headcount.
XLP: watch staples flow as a barometer of consumer stress versus a labor market losing share of GDI.
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