The U.S. economy has been growing faster than expected in recent months. Unemployment remains historically low. And the stock market has hit several all-time highs lately, boosting 401(k) and investment account balances.
By several major metrics, the economy is doing quite well. But many Americans don’t feel like they’re winning. What gives?
The latest consumer sentiment readings from the University of Michigan and The Conference Board show an improvement in June as gas and oil prices retreated from the spike following the start of the Iran war. Even so, Americans remain notably pessimistic.
This disconnect between what everyday Americans are feeling and what economic data shows has been referred to as a “vibecession.” However, a recent report from the New York Federal Reserve Bank suggests that it’s not just the vibes that are off. U.S. workers are not benefiting from U.S. economic growth as they once did.
In fact, they’re losing considerable ground.
In the NY Fed report, the researchers highlighted that the so-called “labor share” has hit an all-time low. This measure represents the share of all income that goes to workers through wages and salaries.
For the first three months of 2026, the share fell to 53.7% — the lowest on record dating back to 1947.
Workers get a smaller piece of the pie
Following World War II, U.S. workers received more than 65% of the national income pie. Their share stayed above 60% into the early 2000s before falling steadily from the dot-com bust and again from the Great Recession in 2008.
The COVID-19 pandemic deepened the decline, and the NY Fed report concluded that the trend isn’t a blip that appears likely to reverse. Rather, it’s an acceleration of a persistent phenomenon that’s been plaguing workers for decades.
“It looks like across all industries the labor share is coming down,” Richard Audoly, one of the authors of the NY Fed report, told S&P Global.
And if the share for workers is shrinking, that means it’s growing for others. In this case, experts say, corporations and investors are seeing major gains in the form of higher profits and larger dividends.
According to separate data from the U.S. Commerce Department, the share of income resulting in corporate profits hit 12.2% — the highest since at least 1929, when the government first began collecting those figures.
There are several reasons why the slice of the income pie has been shrinking for workers, explained labor economist Raymond Robertson to Fortune earlier this year. They all boil down to fewer workers or suppressed wages.
For instance, some firms are investing in artificial intelligence over people. Megacorporations are padding CEO pay and raising prices. Meanwhile, the overall labor force (and population) is shrinking due to fewer immigrants entering the country.
“Data right now is very mixed,” Robertson said. “But I think it also all consistently points to this idea that things are getting worse for workers and much better for billionaires.”
