American wages drop to 43% of national income, the lowest since the Great Depression

The U.S. economy has posted steady growth in recent years, but the split of that income has shifted sharply away from workers. New data shows wages now account for just 43% of national income, the lowest share since the Great Depression. That marks a major change in how income is being divided across the country.

Wages hit a historic low share

American workers’ share of national income fell to 43%, according to the latest national economic data released in 2025. That figure is the lowest recorded since the Great Depression, marking a long-term drop from the postwar decades when labor’s share was consistently higher. The data shows a smaller slice of total income is now going to wages and salaries.

The 43% figure refers to the portion of national income paid directly to workers through wages. The remainder flows through categories such as corporate profits, interest, rent, and other forms of capital income. Economists use this measure to track how the gains from economic growth are divided across the economy.

This drop does not mean every worker got an immediate pay cut in 2025. It means wage growth has not kept pace with the overall growth of national income. In practical terms, more of the country’s total economic output is ending up outside workers’ paychecks.

What the shift means across the country

Because this is a national measure, the effect is not limited to one state or one metro area. Workers in large labor markets such as California, Texas, Florida, and New York are all part of the same broad trend shown in the 43% figure. A state-by-state breakdown tied to this specific measure has not been released.

What is confirmed is that the labor share of income has been under pressure across multiple industries, including manufacturing, retail, logistics, and professional services. The national data does not yet show a full list of which states or local labor markets saw the steepest recent declines. That means local impacts will vary based on wages, hiring, and industry mix.

For households, the shift may help explain why many people feel that headline economic growth has not fully reached their paychecks. National income can rise even when wage gains are modest relative to profits and asset income. That gap is one reason the 43% figure is getting attention well beyond Wall Street.

Why wages are taking a smaller slice

Economists generally tie falling labor share to several long-running forces in the U.S. economy, including automation, globalization, weaker union power, and a growing concentration of profits in large firms. Inflation also affects how workers experience pay, especially when consumer prices rise faster than wage gains. Those factors can reduce labor’s share even during periods of job growth.

The broad pattern has developed over decades rather than in a single quarter. Productivity and corporate earnings have grown strongly in several sectors, while wage growth has often lagged behind total output. That helps explain why a 43% labor share can happen even when unemployment is relatively low.

For residents, the main takeaway is straightforward: a smaller share of the nation’s income is reaching workers as wages. That does not automatically signal a recession, but it does show that growth is being distributed differently than in earlier periods. The current 43% reading now stands as a benchmark in the national debate over pay, profits, and who benefits most from economic expansion.