The American dream slips further away
&imwidth=600&imheight=450&format=webp&quality=medium "The American dream slips further away")
Representative image. Photograph: (Pexels)
According to research by the Federal Reserve Bank of New York, labour's share of national income has fallen to 54.1 per cent in early 2026, down from more than 65 per cent after World War II and 57.7 per cent in early 2020.
The US economy may continue to grow, but a growing body of research suggests that American workers are receiving a smaller share of that growth than ever before.The trend is also reflected in rising financial stress, with many households struggling to keep up with inflation. Here's a closer look at why the gap between economic growth and workers' earnings continues to widen.
American workers are taking home the smallest share of the nation's economic output since official records began in 1947. According to research by the Federal Reserve Bank of New York, labour's share of national income has fallen to 54.1 per cent in early 2026, down from more than 65 per cent after World War II and 57.7 per cent in early 2020.
The rest of the economic gains are increasingly flowing to corporations, shareholders and investors through profits, dividends and capital income.
The findings suggest that while the U.S. economy has continued to expand, workers are capturing a progressively smaller share of that growth. The shift is also visible within corporate America.
Workers received 71.3 per cent of corporate income in the first quarter of 2026, down from 77.8 per cent at the start of 2020 and 79.1 per cent in 1979, according to the Economic Policy Institute.
Economists attribute the long-term decline to weakening union membership, a stagnant federal minimum wage that has remained at $7.25 an hour since 2009, and policy changes that have strengthened returns to capital over labour.
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As corporate profits and shareholder returns have risen, wage growth has struggled to keep pace.
This contributes to what economists describe as a widening K-shaped economy, where higher-income households continue to pull ahead while many middle- and lower-income workers fall behind.
The declining share of income going to workers is reflected in household finances.
Nearly 48 per cent of Americans said their financial situation had worsened compared with a year earlier, according to the Federal Reserve Bank of New York.
A separate CBS News survey found that three out of four Americans believe their incomes are not keeping up with inflation, while only 29 per cent rate the economy as being in good shape.
Rising living costs, record levels of household debt, higher credit card delinquencies and concerns over job security are adding to financial pressure.
Analysts say consumer spending remains supported largely by wealthier households, but the widening gap continues to raise concerns over long-term economic inequality and the durability of consumer demand.
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