(Roughly) Daily

Sasha Rogelberg marks a painful milestone…

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…

… Walmart and FedEx saw similar increases in the number of workers taking federal assistance, as did ride-share 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…

… 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. [See chart at the top of this post.] “A friend refers to it as the ‘revolution chart,’ which [is] disturbing but telling. Inequality fuels social and economic instability.”

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 provider, 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 its buck, the thinking goes…

[Rogelberg examines the argument that AI is a material contributor to the lowering of wages (see also here)…]

… 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.”…

“Amazon workers on food stamps have tripled despite its record revenue—and it’s just the latest evidence of the new economy of shrinking labor shares,” from @fortune.com.

See also: “The combination of economic inequality and economic segregation is deadly,” “No society can surely be flourishing and happy, of which by far the greater part of the numbers are poor and miserable,” and “It’s the economy, stupid.”

* Oliver Goldsmith, The Deserted Village (Read it for free on the Internet Archive)

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As we mind the gap, we might recall that it was on this date in 2011 that hundreds gathered in Zuccotti Park in the Financial District in Manhattan, to kick off the movement that became Occupy Wall Street by occupying the park. Fueled by wide distrust in the private sector after the Great Recession, the movement protested economic inequality, corporate greed, big finance, and the influence of money in politics. The OWS slogan was “We are the 99%.”

While the encampment, and the thousands who visited, were that anchor of the movement, Occupy Wall Street activists disseminated their message through social media, print magazines and newspapers (extant and OWS pop-ups like The Occupied Wall Street Journal), film, radio, and live streaming.

The protesters were forced out of Zuccotti Park on November 15, 2011– then turned their focus to occupying banks, corporate headquarters, board meetings, foreclosed homes, college and university campuses, and to social media.