The Great Shift From Workers to Owners - by Justin Wolfers
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The Great Shift From Workers to Owners<br>For decades, workers got a remarkably stable share of America’s income. Then something changed. Here’s where the money went.
Justin Wolfers<br>Aug 13, 2026
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The stock market is breaking records. Corporate profits are booming. And yet plenty of us look at our paychecks and don’t quite feel the boom.<br>There’s one big idea that can explain this disconnect. It’s called labor’s share of income . It’s how we divide our economic pie between workers and owners. The labor share measures the share of income that goes to workers.<br>Right now, workers are getting just 54 cents of every dollar of income America generates. That’s the lowest share on record.<br>It follows that our economic pie is increasingly being served to owners who get profits, dividends, rents, interest and other forms of capital income.<br>Today I want to ask: what’s going on with the labor share?
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Workers vs Owners
For decades, workers received roughly 62 to 65 cents of every dollar of income generated in America. That includes wages, but also benefits like health insurance and retirement contributions. The number bumped around a bit during booms and recessions, but remained remarkably constant. Indeed, John Maynard Keynes once called the constancy of the labor share “a bit of a miracle.”<br>Then, around 2000, something changed.<br>Labor’s share started falling. It bounced back briefly during the pandemic, then resumed its slide. Today it’s around 54 cents on the dollar.
To be clear: I’m not saying that workers are poorer than they were 30 years ago. On average, they’re doing better. The size of our economic pie has grown, and so a smaller slice of a bigger pie still adds up to more pie.<br>My point, instead, is to focus on the change in how we slice that pie. It matters because the split between workers and owners is one of the most important factors driving who gets what from our economy.<br>But it’s a factor that’s easily overlooked. Last week, Treasury Secretary Scott Bessent went on CNBC and declared that the “K-shaped economy is over.” A couple of days later, he posted the following chart on X to make the case:
Graphic posted by Scott Bessent on X on August 6, 2026. Intended to prove the “K-shaped economy is over.”<br>The chart is basically right — at least as far as it goes. Over the past year, weekly earnings did indeed rise faster for lower-wage workers than for middle-wage workers, and faster still than for higher-wage workers.<br>That’s good news. But Bessent’s chart is answering a narrower question than it appears to. It’s inviting you to focus on what’s happening to labor income, without even considering capital income.<br>He’s relying on a mental shortcut that many of us use. Most of us are workers, so when we think of income, we think of wages. But that misses the income owners get as profits, rent, interest payments, and dividends. Bessent is effectively inviting us to ignore the 46 cents on every dollar of income that’s paid to owners.<br>Let’s not fall for this misdirection. When you’re interested in what’s happening to income, make sure to track what’s happening to all income — including both wages and profits.<br>Follow this advice, and you’ll realize that while Bessent is right that lower-paid workers are gaining on higher-paid workers, he’s stayed quiet about an even more consequential shift in which workers as a whole are losing ground to owners.<br>All of this matters enormously because labor income and capital income are distributed very differently. Most families benefit when wages rise, but only the rich see big gains when capital income rises.<br>The Treasury Department estimates that the top 10% of American families receive about two-fifths of labor income, but roughly four-fifths of positive capital income. Most of us don’t spend much time thinking about capital income because most of us don’t get much of it.<br>And at the very top, the difference gets wild:<br>The top 1% gets about one-tenth of labor income, but over half of capital income.
And the top 0.1% gets roughly 4% of labor income and nearly a third of capital income.
Point is, shifts from labor toward capital have a huge effect on how much of our economic pie we each get.
Is the decline real?
Before we declare that workers are getting the narrowest slice of the pie on record, we should make sure we’re measuring the division of that pie properly.<br>And when it comes to measuring labor’s share, it gets tricky, quickly. There are two big issues to track: net versus gross income, and the income of business owners. Let’s take them in turn.<br>Issue #1: Net income versus gross income
Here’s the issue: Some of the money going to owners isn’t really income anyone gets to spend.<br>Businesses have things that wear out. Trucks get...