As company earnings soar and U.S. GDP balloons, the American workforce isn’t emotion the identical boom. American workers are taking residence small of the country’s general income, data from the Bureau of Labor Statistics shows, and occupation in the U.S. is set to continue to slow.
Labor share, or the part of the U.S.’s financial output that workers obtain through pay and wages, decreased to 52.8% in the second fourth of 2026, its lowest flat since the BLS started record this data in 1947, according to its labor efficiency and expenses report. In the former quarter, labor portion was at 53.6%. This decade, the labor portion average was concerning 55.6%.
That’s notwithstanding company earnings skyrocketing, alongside profits for Fortune 500 companies hitting a document $2.1 trillion in 2025. The U.S. GDP grew 3.4% in the third fourth final year, exceeding economists’ predictions.
That growth has not lone arrive at the disbursal of how much of the pie of prosperity workers are taking home, but additionally how many Americans are in the workforce, economists warn.
“That decrease in the portion 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 School of Government, told Fortune. “The falling portion of earnings is having to do alongside the change towards capital.”
Indeed, there are expanding signs that as national earnings balloons, the U.S. workforce is deflating. Unemployment ticked up to 4.2% in September, and employers added fair 584,000 jobs in 2025 compared to 2 myriad added in 2024. The U.S. added 29,000 jobs in September, concerning one-third of economists’ projections.
The bifurcation of company victories and feeble labor data raises concerns among economists of jobless growth jeopardizing the U.S. workforce, as fine as a K-shaped economy, anywhere the affluent get richer during the mediocre get poorer, becoming additional exaggerated.
“Data correct now is extremely mixed,” Robertson said. “But I think it additionally all consistently points to this idea that things are getting worse for workers and much improved for billionaires.”
What is causing jobless growth?
Robertson attributes weakening labor portion averages to the increase in automation, which he noted is displacing workers, alongside productivity—a metric basically measuring employee output—continuing to rise. Second-quarter GDP data showed nonfarm efficiency growth grew 1.4% final quarter, although the charge has slowed from 2.2% in the identical fourth a twelvemonth ago.
“All these things, bit by bit, are replacing people, and they’re concentrating earnings and their portion of capital,” he said.
Goldman Sachs analysts Joseph Briggs and Sarah Dong estimated in a report, according to Department of Labor job numbers, that AI automation could displace 25% of all activity hours. They predicted that complete the way of the AI acceptance period, a 15% addition in AI-driven efficiency would displace 6% to 7% of jobs, and, at its peak, a 1 myriad addition in unemployed workers, although job relocation hence of AI has not shown up meaningfully in any financial data.
The relocation could be substantial, the analysts said, but stated the impacts of automation volition be tempered by a prosperity of new jobs created hence of the scientific changes.
Automation is expected to be a boon to company profits and GDP, projected to boost GDP by 1.5% by 2035, according to a Wharton brief published in September 2025. Early signs signify AI could run efficiency gains, alongside about 80% of workforce reporting AI makes them faster at particular tasks, but lone 37% of companies seeing an effect of that efficiency on functioning profits, according to McKinsey data, and AI functioning expenses continue to constrain its deployment.
Robertson added that expanding unemployment, which he expects to see increase complete the next few months, keeps wages down, allowing margins and profits to expand.
To be sure, the latest efficiency surge has been an “open question,” Morgan Stanley economists have argued, not unanimously attributed to risen acceptance of AI or automation. The analysts suggested this addition would be cyclical, or vestiges of pandemic-era habits of companies making additional from less.
An Oxford Economists investigation brief from before this twelvemonth suggested companies are disguising overhiring-related layoffs hence of AI, but stated automation-related workforce reductions have not yet happened en masse. Additionally, during unemployment has been ticking up complete the former year, it is motionless comparatively low.
Why is an immigration crackdown backfiring on U.S. labor?
Mark Regets, elder chap at National Foundation for American Policy (NFAP), sees a distinct logic for a slowing workforce. He told Fortune President Donald Trump’s immigration crackdown has not done what Trump administration officials, specified as White House Deputy Chief of Staff Stephen Miller, stated it would in increasing the figure of U.S.-born workers. Instead, according to Regets, Trump’s immigration policies have not lone decimated the foreign-born workforce, but has additionally created small opportunities for domestic-born workers to discover jobs.
NFAP data shows a 1.1 myriad to 1.4 million-person reduction in the foreign-born workforce since January 2025, accordant alongside the Congressional Budget Office’s study final year indicating shrinking U.S. community growth hence of migrants being deported or refusing to arrive to the U.S. out of fear of antagonistic polities.
“The data is raising huge red flags that we are losing immigrants of all types that we alternatively would be advancing America’s economy,” Regets said.
Recent BLS data is counter-evidence to Miller’s disagreement that harsher immigration guideline would develop the U.S. workforce. The labor involvement charge for foreign-born workers cut from 66.3% to 66% from September 2025 to September 2026, and labor involvement for native-born workers has likewise fallen from 61.6% to 60.9% complete the identical period. Fewer immigrant workers may really create it harder for U.S.-born individuals to discover work.
“A business unable to discover the workers it needs for several roles could close downward operations fairly than continuing,” Regets said.
He noted skillset assortment in a office could boost efficiency and validate employing additional people. Greater immigration can additionally addition person spending and stimulate businesses, as fine as advance businesses to obtain advantage of roomy labor market preparedness and search out their labor alternatively of offshoring jobs.
How does the U.S. reverse a shrinking labor force?
While friendlier immigration policies could assistance reverse an exodus of foreign-born workers, Robertson stated addressing the office automation shove would be key to expanding the U.S. workforce.
“There are trades that are technology-assisted,” he said. “Those are going to be in higher demand, but you really motionless have to have a important funding in skills.”
The young generation of workers are already prepared to modify to a changing labor landscape. Gen Z are flocking to commerce schools in hopes of a finding a job as a carpenter or welder not so effortlessly outsourced by AI, and in 2024, enrollment in vocation-based community colleges increased 16%, according to data from the National Student Clearinghouse.
Companies have taken it upon themselves to provide reskilling opportunities to employees. A CareerTrainer survey from June established that 72% of hiring managers intended to reskill employees. While the U.S. Department of Labor updated guidelines to advance states to modify office betterment systems, Robertson asserted the authorities hasn’t done adequate in multiple decades to imbue the workforce alongside necessary skillsets for forthcoming jobs.
“Democrats and Republicans have not considerably invested in training [or] the retraining or energetic labor market programs that you need to equivalent workers to jobs,” Robertson said. “That’s the apparent solution.”
Without changes, economists see the form of an occupation slowdown continuing, but alongside greater involvement concerning the capability for the U.S. economics to prolong growth.
“We need job growth to have a expanding economy, and I think we need job growth to pay our debts,” Regets said. “I don’t cognize how you have job growth alongside a shrinking labor force.”
A type of this narrative was published on Fortune.com on Jan. 13, 2026.
More on the American workforce and wages:
- Goldman says the economics is rewarding chief ownership complete labor—and most Americans don’t own adequate of it to benefit
- Trump’s farmworker pay cut moved $2.5 milliard a year from workers to growers. A fairness says it’s illegal, and rear pay could follow
- The minimum pay is now the lowest it’s been in 70 years—making the national pay flat ‘officially a poorness wage,’ study finds
