A New Low for American Workers
Our K-shaped economy is growing K-er by the day.
Figures from the Bureau of Labor Statistics released earlier this month show that the labor share of the nation’s GDP hit the lowest point it’s been at since the BLS began measuring such things in 1947. In that year, the labor share—that is, the pay and benefits that American workers claimed—stood at 70 percent of the nation’s income, with the remaining balance going to profits and other investment income.
In the third quarter of 2025, the labor share stood at 53.8 percent. That means that the share of the nation’s income going to workers over the past 78 years has declined by roughly 16 percent, as the share going to investors has grown by the same amount.
A similar study by the RAND Corporation, as I noted in our current print issue, found that the share of the taxable income of the bottom 90 percent of wage earners constituted 67 percent of all such income in 1975, and just 46.8 percent of all taxable income in the last year (2019) for which they had the numbers. Extrapolating from RAND’s figures, I calculated that had that bottom 90 percent been able to retain their 1975 share of the nation’s taxable income, each of those workers would have seen their annual income boosted by $28,000.
Now, the BLS is documenting the same upward redistribution of income and wealth that RAND did.
Actually, the BLS has been documenting this for decades, as this profound shift from rewarding work to rewarding investment in others’ work has been years in the making. Much of this shift is due to changes in capitalism: to globalization, which has brought down many incomes in developed economies; to financialization, in which corporations have come under greater pressure to reward investors at the expense of their employees.
That said, this redistribution has been particularly dire in the United States. The nations of the European Union have seen a similar shift, but the labor share in Europe has generally been about four percentage points higher than its level here in the States.
It’s not all that hard to identify the reasons behind America’s epochal transformation from a nation that honors work to a nation that honors investment. In 1947 America, when the labor share stood at 70 percent, more than one-third of the workforce was unionized, and taxes on the highest incomes routinely exceeded 70 percent. But for the heirs of the Rockefellers and the Fords, we were billionaire-poor, even as record numbers of working-class Americans found themselves, for the first time, able to buy houses.
In the years since, the war on unions waged by business and its helpmeets in Congress and the courts has brought the rate of private-sector unionization down from 35 percent to just 6 percent. Jobs have been downgraded to gigs. Tax rates on capital income have fallen well beneath the tax rates on comparable levels of labor income. And as Supreme Court decisions on campaign spending have effectively subordinated the policies of elected officials to the whims of the rich, the rich have been able to secure public policies, on taxes and a host of other concerns, that only accelerate this redistribution of the nation’s income into their own coffers.
Even as this redistribution continued apace, however, it took the great majority of Americans more than half a century to recognize it as anything more than a dip in their individual fortunes. It’s only been in the past 10 or 15 years—beginning with the emergence of Occupy Wall Street and Bernie Sanders’s first presidential campaign—that the existence of this redistribution became widely visible as a national problem. Today, however, with the crises of affordability in housing, health care, education, and even food affecting scores of millions of Americans, we’re beginning to see a politics—potentially, a majoritarian politics—devoted to curtailing this upward redistribution and bringing some of the nation’s income back to those who actually do its work.
It’s in California, not surprisingly, where this movement is taking off. One local union is funding a signature-gathering campaign for a ballot measure that would place a one-time 5 percent tax on the 2025 wealth of the state’s billionaires. Whether or not this measure passes (critics argue that billionaires will flee the state), it may inspire campaigns for such legislation at the national level (billionaires could then opt to renounce their citizenship, but if they did, they at least would no longer be legally able to contribute to American political campaigns).
Even as the signature gathering for the statewide wealth tax proceeds, separate municipal ballot-measure campaigns have commenced in Los Angeles and San Francisco to raise taxes on corporations doing business there whose CEOs make 50 times (in the Los Angeles initiative) or 100 times (in the San Francisco initiative) what their median-paid worker makes. (Federal law requires publicly traded corporations to annually report their ratios to the Securities and Exchange Commission.) I should add that this is a tax policy I’ve been beating drums for over the past 15 years.
There’s even a distinctly Hollywood version of this drive for a more equitable economics. Ben Affleck and Matt Damon, the stars of the Netflix movie The Rip, which Netflix began streaming on Friday, demanded that the company expand its bonus policy, which had Netflix paying the two of them a bonus if a sufficient number of viewers streamed the picture, to apply to everyone who worked on the picture, whether in front of or behind the camera: 1,200 workers overall. Ben and Matt carry some heft: Netflix, which had never done anything like this, agreed to pay bonuses to all 1,200.
This approach to performance bonuses is not just a rarity in Hollywood; it’s all but unheard of in corporate America. Your typical American corporation tends to reward its CEO and perhaps a few other top executives when its stock valuation increases over the course of a year, often even when that increase simply reflects an increase in overall stock market valuations. No such bonuses accrue to any other employees, absent whose performance of their jobs the stock value would not have risen. And due to deunionization, at least 94 percent of private-sector employees can’t even raise such topics as increased profits or higher stock valuations when bargaining for raises with management, because absent a union, they can’t bargain with management. Given that, a federal law requiring the sharing of company performance bonuses with all employees in corporations that bestow such bonuses on their CEOs seems very much in order. We could call it the Ben and Matt Equitable Bonus Law.
Absent a radical change in politics and law, the distribution of the nation’s income from work to investment will only accelerate. The 2025 nadir in labor’s share was partly a function of the rising number of jobless Americans, which is only likely to grow as AI surges to replace humans. It’s a function of the declining share—approaching zero—of American workers able to bargain with management for compensation, and of the rising share of workers who have a gig rather than a job, much less a full-time job. Beginning with Sanders, Democratic politicos have begun to address this redistribution, but even the Democratic left needs to address it more frontally. It shouldn’t be all that hard. All they’d be demanding is that America reward and honor work as it once did, as it did when Americans could actually afford to buy homes and pay for their kids’ care and education, whether before or after K-12. That these changes now require far-reaching changes to workers’ rights, tax policy, and public provision of necessities the market can’t deliver—well, that’s capital’s fault. It’s time that capital was made to pay for that.
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