Labor’s Share of Income Little Changed Since 1948

Labor earns the same portion of net income in the United States today as it did in 1948—a remarkable constant in the post-war era. The growth of automation, the expansion of global trade, and the decline of union membership since 1948 have not changed labor’s aggregate share of income. The Bureau of Labor Statistics (BLS) produces a prominent estimate that shows labor’s share falling over time, but this BLS estimate uses a changing definition of self-employment income and examines gross income instead of net income. Measuring self-employment income consistently and examining income net of depreciation shows that labor’s share of income has hardly changed in more than half a century. Workers have the same leverage today as they did when unions were stronger, computers filled an entire room, and international trade was far more restricted than it is today.

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