The U.S. workforce has just made the type of history it likely wishes it didn’t. Working Americans are taking home the smallest percentage of economic output, 52.8%, since the Bureau of Labor Statistics began tracking the metric in 1947.
But as the share of wealth workers take home through wages—called labor share—is shrinking, corporate profits have exploded, with the S&P 500 index gaining 600% since the beginning of the century, while wages have increased just 12.5% over the same period, adjusted for inflation. In other words: Corporations are raking in cash, but American workers are reaping less and less of the rewards.
The consequences associated with shrinking labor shares are now becoming tangible.
A recent Government Accountability Office (GAO) report found that across the 11 states sampled, Amazon, the country’s largest company by revenue, has 12,346 workers on the Supplemental Nutrition Assistance Program (SNAP) and 11,338 relying on Medicaid. That was nearly triple the number of Amazon employees in need of federal assistance compared to 2020, when GAO conducted a similar report. During that same period, Amazon saw an increase in annual profits from $11.6 billion to $77.7 billion. Amazon’s 2025 revenue soared 12% year-over-year, from $638 billion to a record $717 billion. Amazon spokesperson Rachael Lighty told Fortune the conclusion drawn from the GAO report is “wrong,” and that it is misleading to look at raw numbers rather than percentages. “When you look at the actual facts, you see that Amazon pay is among the best in the industry, regular full-time employees have access to health care from their first day—at only $5 per week with $5 copays for employee-only coverage—and 74% of our regular full-time employees are enrolled in an Amazon health insurance plan, well above the 65% private-sector take-up rate for full-time workers,” she said in a statement. “We challenge other large retailers to provide the same Day 1 comprehensive healthcare benefits that we do.”
Amazon did not respond to Fortune’s request for comment.
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Walmart and FedEx saw similar increases in the number of workers taking federal assistance, as did rideshare and delivery companies. Kathryn Larin, director for education, workforce, and income security issues at GAO, told Fortune the data illustrates that the Americans taking advantage of social safety net programs today are overwhelmingly in the workforce, with most working full time. The income threshold for SNAP eligibility is about 130% of the poverty line, suggesting that despite many of these workers clocking in at their jobs, they still don’t have enough money to meet their basic needs. “What this analysis really points to is the large number of people who have very low incomes and continue to have very low income,” Larin said. “I mean, these are families that are really barely able to make ends meet, and yet they are working, and they are working a lot.”
Diane Swonk, chief economist and managing director at KPMG, recently warned of the hidden consequences of a shrinking labor share, particularly that despite economic indicators suggesting the economy is stable, most Americans are facing an ongoing affordability crisis. KPMG found in February that since 1982, corporate profits as a share of U.S.
GDP increased from 8% to 15.85%. During that same period, employee compensation as a share of U.S.
GDP shrank from 66.6% to 61.9%. “This chart from my recent Economic Compass still haunts me,” Swonk said in a social media post at the time. “A friend refers to it as the ‘revolution chart,’ which [is] disturbing but telling. Inequality fuels social and economic instability.”
How did the U.S.
labor share unravel? This trend has been about 50 years in the making, according to Anna Stansbury, an assistant professor of work and organization studies at the MIT Sloan School of Management.
Fewer workers in the U.S.
are represented by unions—20.1% of U.S. workers in 1983 compared to 10.0% in 2025—giving them fewer opportunities to bargain for salaries and benefits, she noted. But more so, Stansbury blames the fissuring of the workplace, or the breakdown of the employer-employee relationship. In the past, the typical employer-employee relationship would be that of direct employment: A worker for a company does their work at the company they are employed by.
For example, a large bank like Bank of America used to employ a janitor to clean its offices. But “in more and more cases, that’s not actually people’s experience of the workplace, particularly in lower middle-income jobs,” Stansbury told Fortune. Instead, large workplaces like retailers and banks hire gig workers or subcontractors to complete jobs once done by direct employees: Companies hire a security company, which employs a security guard to work outside that large company’s office. Delivery drivers are contract workers, not full-time employees.
As a result, companies don’t have to provide those workers equity or benefits. If a subcontractor violates labor law, the company contracting them is not liable. In the meantime, these large companies are not only saving money on benefits, but are also getting to argue that they are increasing efficiency by not spending resources on workers whose roles are not directly driving revenue, Stansbury explained.
A bank should employ bankers, not janitors, to get the most bang for their buck, the thinking goes.
Brent Neiman, a professor of economics at the University of Chicago, believes AI has been the key driver of diminishing labor shares. In a New York Times op-ed published this week, he argued the technology’s productivity promises pose the greatest threat to wages. “Anyone who has used ChatGPT can see how much work now done by people could soon be done by technology,” he wrote. Apollo Chief Economist Torsten Slok has already observed a correlation between AI adoption and lowered wages. In a white paper published in July, he and economist Sania Edlich found that among 321 occupations between 2015 and 2025, jobs with high exposure to AI saw a 6.7% decline in real wage growth after 2023 (following the wide release of ChatGPT), despite no employment changes, suggesting that while AI is not displacing jobs, it is associated with compressed wages. In other words, companies are seeing increases in productivity, but are using those increases as a cover to raise prices, while keeping wages stagnant.
What is the future of workers’ wages relative to economic growth? Stansbury has a slightly different theory about AI.
While the technology could begin to have an aggregate impact on the labor market, it’s still too early to say whether today’s shrinking labor share is part of a broader economic cycle, or if it’s a secular event, she said. Unexpected inflation spikes, like what is currently happening, are usually associated with poorer real wages.
If inflation is less volatile in the coming years and wage growth recovers, today’s trend of shrinking labor share could turn out to be cyclical, Stansbury said. On the other hand, Stansbury noted, a tightening labor market should increase labor share, and the labor market is already relatively tight. If inflation stabilizes, employment remains narrow, and the labor share increases, it will be a sign of an economic cycle completing itself. A bigger problem will be if wage growth stays low even if inflation improves and the labor market stays tight.
“If those two things happen and the labor share continues to fall,” she said, “then it would suggest that there’s actually been a secular shift, a secular acceleration in the downward trend.”
