American workers have seen their share of national income drop to the lowest level since 1947, according to analysis by Federal Reserve economists. As of early 2026, workers received 54.1% of national income, a significant decline from over 65% shortly after World War II and down from 57.7% in early 2020. This trend reflects a broader shift where a growing portion of economic gains is being allocated to shareholders and corporate profits rather than wages. A recent survey indicates that nearly half of Americans feel their financial situation has worsened in the past year, while three-quarters report that their incomes are not keeping pace with inflation. Economists attribute the decline in the labor share of income to various factors, including the erosion of union power and tax laws favoring corporate profits.
Why It Matters
The decline in workers’ share of income is significant as it highlights longstanding economic inequalities in the United States. Union membership has halved since 1983, contributing to diminished bargaining power for workers. The federal minimum wage has remained stagnant at $7.25 since 2009, marking its lowest inflation-adjusted value in 50 years. These trends have resulted in a K-shaped economy, where the wealth of top earners is increasing while low- and middle-income workers struggle to maintain their financial stability, reflecting a broader systemic shift in income distribution.
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