The American Economy Is Growing, But Workers Are Getting A Shrinking Slice

 The U.S. as a whole gets more prosperous every year but less and less of that prosperity is showing up in workers' paychecks.

That's according to fresh analysis by researchers at the Federal Reserve Bank of New York. In a blog post on Wednesday, the researchers highlighted the declining share of the nation's economic output going to workers in the form of wages and salaries, as opposed to corporate profits and capital.

The "labor share" has been on a downward trajectory since the second half of the 20th century and has continued to plunge in the post-pandemic era, reaching an all-time low in 2026, according to records dating back to 1947. Meanwhile, the overall U.S. economy has continued to expand, meaning workers are getting a smaller slice of a larger pie.

Here's how those two statistics, the labor share and the real GDP, have changed since 2017:

Why have workers taken home a smaller and smaller share of economic output in the U.S. and other advanced economies? Many researchers have landed on different answers, including rising profit margins for businesses, the decline of unions, the rise of China as an economic power and technological change, for starters.

Whatever the cause, the trend seems to be firmly on its former trajectory after being interrupted by the pandemic's economic upheaval and follows a pattern similar to past recessions, the New York Fed researchers found.

https://www.investopedia.com/the-american-economy-is-growing-but-workers-are-getting-a-shrinking-slice-12006070