As company earnings soar and the U.S. GDP balloons, the American workforce isn’t feeling the identical increase. American employees are taking dwelling much less of the nation’s general wealth, information 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 employees obtain by wage and wages, decreased to 53.8% within the third quarter of 2025, its lowest stage because the BLS began recording this information 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 employees are taking dwelling, but in addition what number of Individuals are within the workforce, economists warn.
“That decline within the share of labor has acquired to be both falling earnings or falling numbers of individuals,” Raymond Robertson, a labor economist at Texas A&M’s Bush College of Authorities, instructed Fortune. “The falling share of earnings is having to do with the shift in direction of capital.”
Certainly, there are rising indicators that as nationwide earnings balloons, the U.S. workforce is deflating. Unemployment ticked right down to 4.4% in December, however nonetheless sits above the 4.1% price 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 information raises issues amongst economists of jobless progress jeopardizing the U.S. workforce, in addition to a Okay-shaped financial system, the place the wealthy get richer whereas the poor get poorer, changing into extra exaggerated.
“Knowledge proper now could be very blended,” Robertson mentioned. “However I feel it additionally all persistently factors to this concept that issues are getting worse for employees and significantly better for billionaires.”
Making sense of jobless progress
Robertson attributes weakening labor share averages to the rise in automation, which he famous is displacing employees, with productiveness—a metric primarily measuring employee output—persevering with to rise. Third-quarter GDP information confirmed nonfarm productiveness progress soared to an annualized price of 4.9%.
“All this stuff, little by little, are changing folks, they usually’re concentrating earnings 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 may 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 employees.
The displacement is substantial, the analysts mentioned, however mentioned the impacts of automation can be tempered by a wealth of recent jobs created because of the technological adjustments.
Automation is anticipated 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 features, with firms who invested $10 million or extra in AI reporting vital productiveness features 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 following few months, retains wages down, permitting margins and income to develop.
To make certain, the current productiveness surge has been an “open query,” Morgan Stanley economists wrote in a notice to shoppers this week, not unanimously attributed to elevated adoption of AI or automation. The analysts instructed this enhance can be cyclical, or vestigates of pandemic-era habits of firms making extra from much less.
An Oxford Economists analysis temporary revealed earlier this month instructed 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, equivalent to White Home Deputy Chief of Employees Stephen Miller, mentioned it might in rising the variety of U.S.-born employees. As a substitute, 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 employees to seek out jobs.
The latest BLS family survey reveals a decline of 881,000 foreign-born employees since January 2025, and a decline of 1.3 million employees since a March 2025 peak, in step with the Congressional Finances Workplace’s report final yr indicating shrinking U.S. inhabitants progress because of migrants being deported or refusing to come back to the U.S. out of concern of hostile polities.
“The info is elevating enormous purple flags that we’re dropping immigrants of every kind that we in any other case can be advancing America’s financial system,” Regets mentioned.
The rising U.S. unemployment price, 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 employees may very well make it more durable for U.S.-born people to seek out work.
“An organization unable to seek out the employees it wants for some roles may shut down operations reasonably than persevering with,” Regets mentioned.
He famous that skillset range in a office may increase productiveness and justify using extra folks. Larger immigration may also enhance shopper spending and stimulate companies, in addition to encourage companies to benefit from ample labor market availability and hunt down their labor as a substitute of offshoring jobs.
Reversing a shrinking labor power
Whereas friendlier immigration insurance policies may assist reverse an exodus of foreign-born employees, Robertson mentioned addressing the office automation push can be key to rising the U.S. workforce.
“There are trades which might be technology-assisted,” he mentioned. “These are going to be in greater demand, however you actually nonetheless need to have a major funding in expertise.”
The younger technology of employees 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 neighborhood faculties elevated 16%, in keeping with information from the Nationwide Pupil Clearinghouse.
Corporations have taken it upon themselves to present reskilling alternatives to workers. An Specific Employment Professionals-Harris Ballot survey from 2024 discovered that 68% of hiring managers supposed to reskill workers in some unspecified time in the future in the course of 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 methods, Robertson argued the federal government hasn’t carried out sufficient in a number of a long time to imbue the workforce with needed skillsets for future jobs.
“Democrats and Republicans haven’t considerably invested in coaching [or] the retraining or lively labor market packages that you have to match employees to jobs,” Robertson mentioned. “That’s the apparent answer.”
With out adjustments, economists see the sample of an employment slowdown persevering with, however with better concern in regards to the potential for the U.S. financial system to maintain progress.
“We want job progress to have a rising financial system, and I feel we’d like job progress to pay our money owed,” Regets mentioned. “I don’t know the way you will have job progress with a shrinking labor power.”
