The labor share of U.S. nominal gross domestic product fell to a record low of 52.9% in the second quarter, down from 53.7% in the first quarter, according to Bureau of Labor Statistics data. This decline reflects productivity gains outpacing wage growth.
The declining labor share of GDP indicates that a smaller portion of economic output is going to workers, potentially exacerbating income inequality and affecting consumer spending power. This trend highlights how productivity gains are currently benefiting capital more than labor.
The share of the U.S. economy accruing to workers, known as the labor share of nominal gross domestic product, slid to a record low of 52.9% in the second quarter. This marks a decrease from 53.7% in the first quarter, according to data from the Bureau of Labor Statistics. The series, which measures the percentage of output that workers receive as compensation, has not been this low since it began in 1947.
The decline coincides with a boom in productivity, where output gains have outpaced wage growth. This trend suggests that the benefits of increased economic efficiency are increasingly flowing to business owners and shareholders rather than to employees through higher wages.
Factors contributing to the long-term decline in the labor share include the diminishing influence of organized labor and globalization, which shifted manufacturing jobs overseas. More recently, technological advancements such as automation and artificial intelligence have enabled companies to boost output without significant increases in their workforce.
Despite the overall trend, real weekly earnings, which account for inflation, remained largely unchanged in the first half of the year. However, the data for June showed a positive turn, snapping a three-month streak of declines and marking the strongest reading in six years.