As company earnings soar and the U.S. GDP balloons, the American workforce isn’t feeling the identical increase. American staff are taking dwelling much less of the nation’s total wealth, knowledge from the Bureau of Labor Statistics present, and employment within the U.S. is ready to proceed to sluggish.
Labor share, or the portion of the U.S.’s financial output that staff obtain by means of wage and wages, decreased to 53.8% within the third quarter of 2025, its lowest degree for the reason that BLS began recording this knowledge in 1947, in keeping with its labor productiveness and prices report revealed final week. Within the earlier quarter, labor share was at 54.6%. This decade, the labor share common was 55.6%.
That’s regardless of company earnings skyrocketing, with income for Fortune 500 firms hitting a file $1.87 trillion in 2024. The U.S. GDP grew 4.3% within the third quarter final yr, exceeding economists’ predictions.
That progress has not solely come on the expense of how a lot of the pie of wealth staff are taking dwelling, but in addition what number of People are within the workforce, economists warn.
“That decline in the share of labor has got to be either falling earnings or falling numbers of people,” Raymond Robertson, a labor economist at Texas A&M’s Bush Faculty of Authorities, instructed Fortune. “The falling share of income is having to do with the shift towards capital.”
Certainly, there are rising indicators that as nationwide earnings balloons, the U.S. workforce is deflating. Unemployment ticked all the way down to 4.4% in December, however nonetheless sits above the 4.1% fee from 12 months earlier than. Furthermore, employers added simply 584,000 jobs in 2025 in comparison with 2 million added in 2024.
The stark bifurcation of company victories and weak labor knowledge raises issues amongst economists of jobless progress jeopardizing the U.S. workforce, in addition to a Ok-shaped financial system, the place the wealthy get richer whereas the poor get poorer, changing into extra exaggerated.
“Data right now is very mixed,” Robertson mentioned. “But I think it also all consistently points to this idea that things are getting worse for workers and much better for billionaires.”
Making sense of jobless progress
Robertson attributes weakening labor share averages to the rise in automation, which he famous is displacing staff, with productiveness—a metric primarily measuring employee output—persevering with to rise. Third-quarter GDP knowledge confirmed nonfarm productiveness progress soared to an annualized fee of 4.9%.
“All these things, bit by bit, are replacing people, and they’re concentrating income and their share of capital,” he mentioned.
Goldman Sachs analysts Joseph Briggs and Sarah Dong estimated in a report this week, based mostly on Division of Labor job numbers, that AI automation might displace 25% of all work hours. They predicted that over the course of the AI adoption interval, a 15% enhance in AI-driven productiveness would displace 6% to 7% of jobs, and, at its peak, a 1 million enhance in unemployed staff.
The displacement is substantial, the analysts mentioned, however mentioned the impacts of automation shall be tempered by a wealth of recent jobs created because of the technological modifications.
Automation is predicted to be a boon to company income and GDP, anticipated to spice up GDP by 1.5% by 2035, in keeping with a Wharton temporary revealed in September 2025. Early indicators point out AI is already driving productiveness beneficial properties, with firms who invested $10 million or extra in AI reporting vital productiveness beneficial properties in comparison with organizations investing much less within the know-how, in keeping with EY’s U.S. AI Pulse Survey.
Robertson added that rising unemployment, which he expects to see rise over the subsequent few months, retains wages down, permitting margins and income to develop.
To make sure, the current productiveness surge has been an “open question,” Morgan Stanley economists wrote in a notice to shoppers this week, not unanimously attributed to elevated adoption of AI or automation. The analysts prompt this enhance could be cyclical, or vestigates of pandemic-era habits of firms making extra from much less.
An Oxford Economists analysis temporary revealed earlier this month prompt firms are disguising overhiring-related layoffs because of AI, however mentioned automation-related workforce reductions haven’t but occurred en masse. Moreover, whereas unemployment has been ticking up over the previous yr, it’s nonetheless comparatively low.
An immigration crackdown backfires on U.S. labor
Mark Regets, senior fellow at Nationwide Basis for American Coverage, sees a special motive for a slowing workforce. He instructed Fortune President Donald Trump’s immigration crackdown has not carried out what Trump administration officers, similar to White Home Deputy Chief of Employees Stephen Miller, mentioned it will in rising the variety of U.S.-born staff. As an alternative, in keeping with Regets, Trump’s immigration insurance policies haven’t solely decimated the foreign-born workforce, however has additionally created fewer alternatives for domestic-born staff to seek out jobs.
The latest BLS family survey reveals a decline of 881,000 foreign-born staff since January 2025, and a decline of 1.3 million staff since a March 2025 peak, in step with the Congressional Price range Workplace’s report final yr indicating shrinking U.S. inhabitants progress because of migrants being deported or refusing to return to the U.S. out of worry of hostile polities.
“The data is raising huge red flags that we are losing immigrants of all types that we otherwise would be advancing America’s economy,” Regets mentioned.
The rising U.S. unemployment fee, up from 3.7% in December 2024 is counterevidence to Miller’s argument that harsher immigration coverage would develop the U.S. workforce, he added. In truth, fewer immigrant staff may very well make it more durable for U.S.-born people to seek out work.
“A company unable to find the workers it needs for some roles could shut down operations rather than continuing,” Regets mentioned.
He famous that skillset variety in a office might increase productiveness and justify using extra folks. Better immigration can even enhance client spending and stimulate companies, in addition to encourage companies to make the most of ample labor market availability and search out their labor as an alternative of offshoring jobs.
Reversing a shrinking labor power
Whereas friendlier immigration insurance policies might assist reverse an exodus of foreign-born staff, Robertson mentioned addressing the office automation push could be key to rising the U.S. workforce.
“There are trades that are technology-assisted,” he mentioned. “Those are going to be in higher demand, but you really still have to have a significant investment in skills.”
The younger era of staff are already ready to adapt to a altering labor panorama. Gen Z are flocking to commerce faculties in hopes of a discovering a job as a carpenter or welder not so simply outsourced by AI, and in 2024, enrollment in vocation-based group faculties elevated 16%, in keeping with knowledge from the Nationwide Scholar Clearinghouse.
Corporations have taken it upon themselves to offer reskilling alternatives to workers. An Categorical Employment Professionals-Harris Ballot survey from 2024 discovered that 68% of hiring managers supposed to reskill workers sooner or later throughout the yr, up from 60% in 2021. Whereas the U.S. Division of Labor up to date tips to encourage states to adapt office improvement techniques, Robertson argued the federal government hasn’t carried out sufficient in a number of a long time to imbue the workforce with crucial skillsets for future jobs.
“Democrats and Republicans have not significantly invested in training [or] the retraining or active labor market programs that you need to match workers to jobs,” Robertson mentioned. “That’s the obvious solution.”
With out modifications, economists see the sample of an employment slowdown persevering with, however with larger concern in regards to the capacity for the U.S. financial system to maintain progress.
“We need job growth to have a growing economy, and I think we need job growth to pay our debts,” Regets mentioned. “I don’t know how you have job growth with a shrinking labor force.”
