As corporate profits soar and U.S. GDP explodes, America’s workforce isn’t feeling the same boom. American workers bring in a smaller share of the country’s overall wealth, according to data from the Bureau of Labor Statistics, and U.S. employment is expected to continue to slow.
The labor share, or the share of U.S. economic output that workers receive in the form of wages, declined to 53.8% in the third quarter of 2025, its lowest level since the BLS began recording this data in 1947, according to its Labor Productivity and Costs report released last week. In the previous quarter, the labor share was 54.6%. This decade, the average labor share was 55.6%.
That’s despite soaring corporate profits, with profits for Fortune 500 companies hitting a record $1.87 trillion in 2024. U.S. GDP grew 4.3% in the third quarter of last year, beating economists’ forecasts.
This growth has come at the expense not only of the share of wealth that workers bring home, but also of the number of working Americans, economists warn.
“This decline in the labor share must be due to either a decline in income or a decline in the number of people,” said Raymond Robertson, a labor economist at the Bush School of Government at Texas A&M. Fortune. “The decrease in the share of income is linked to the transition to capital. »
Indeed, there are growing signs that as national income rises, America’s workforce is shrinking. Unemployment fell to 4.4% in December, but remains higher than the 4.1% rate recorded 12 months earlier. Additionally, employers only created 584,000 jobs in 2025, compared to 2 million in 2024.
The sharp bifurcation between corporate victories and weak jobs data is raising concerns among economists that jobless growth is imperiling America’s workforce, as well as a K-shaped economy, in which the rich get richer while the poor get poorer, is becoming increasingly exaggerated.
“The current data is very mixed,” Robertson said. “But I think it also goes back to this idea that things are getting worse for workers and getting a lot better for billionaires.”
Giving meaning to jobless growth
Robertson attributes the average weakening of the labor share to increasing automation, which he says is displacing workers, while productivity – a metric essentially measuring worker output – continues to rise. Third-quarter GDP data showed that non-farm productivity growth climbed to an annualized rate of 4.9%.
“All these things, little by little, replace people and concentrate income and their share of capital,” he said.
Goldman Sachs analysts Joseph Briggs and Sarah Dong estimated in a report released this week, based on Labor Department employment figures, that AI automation could eliminate 25% of all work hours. They predict that over the period of AI adoption, a 15% increase in AI-driven productivity would eliminate 6-7% of jobs and, at peak, result in an increase of 1 million unemployed workers.
The shift is substantial, analysts say, but believe the impacts of automation will be mitigated by a host of new jobs created as a result of technological changes.
Automation is expected to be a boon to business profits and GDP, and is expected to increase GDP by 1.5% by 2035, according to a Wharton report released in September 2025. Early signs indicate that AI is already generating productivity gains, with companies that have invested $10 million or more in AI reporting significant productivity gains compared to organizations investing less in the technology, according to EY’s US AI Pulse survey.
Robertson added that rising unemployment, which he expects to rise over the coming months, is keeping wages low, allowing margins and profits to rise.
To be sure, the recent increase in productivity is an “open question,” Morgan Stanley economists wrote in a note to clients this week, and it is not unanimously attributed to increased adoption of AI or automation. Analysts suggested the increase would be cyclical or a holdover from pandemic-era business habits, earning more for less.
An Oxford Economists study released earlier this month suggests companies are hiding layoffs linked to AI-related overhiring, but says automation-related workforce reductions have not yet occurred en masse. Additionally, although unemployment has increased over the past year, it still remains relatively low.
Immigration crackdown backfires on American workers
Mark Regets, a senior fellow at the National Foundation for American Policy, sees a different reason for the workforce slowdown. He said Fortune President Donald Trump’s immigration crackdown has not had the effect that Trump administration officials, such as White House deputy chief of staff Stephen Miller, have said would increase the number of U.S.-born workers. Instead, Regets says, Trump’s immigration policies have not only decimated the foreign-born workforce, but also created fewer opportunities for native-born workers to find jobs.
The most recent BLS household survey finds a decline of 881,000 foreign-born workers since January 2025 and a decline of 1.3 million workers since a peak in March 2025, consistent with last year’s Congressional Budget Office report indicating slowing U.S. population growth due to the expulsion of migrants or refusals to come to the United States for fear of hostile policies.
“The data raises huge red flags that we are losing immigrants of all types who would otherwise drive the U.S. economy forward,” Regets said.
The rising U.S. unemployment rate, up from 3.7% in December 2024, contradicts Miller’s argument that tougher immigration policy would lead to growth in the U.S. workforce, he added. In fact, fewer immigrant workers could make it harder for U.S.-born people to find jobs.
“A company unable to find the workers it needs for certain positions could shut down operations rather than continue them,” Regets said.
He pointed out that skill diversity in the workplace could increase productivity and justify hiring more people. Increased immigration can also increase consumer spending and boost business, while encouraging businesses to take advantage of the abundant labor market and source their workforce instead of offshoring their jobs.
Reversing the decline in the workforce
Although more favorable immigration policies could help reverse the exodus of foreign-born workers, Robertson said combating workplace automation would be key to growing the U.S. workforce.
“Some jobs are technology-assisted,” he said. “These are going to be more and more in demand, but we still need to invest significantly in skills.”
The younger generation of workers is already ready to adapt to a changing work landscape. Generation Z is flocking to trade schools in hopes of finding a job as a carpenter or welder that isn’t so easily outsourced to AI, and by 2024, career community college enrollment is up 16%, according to data from the National Student Clearinghouse.
Companies have taken the initiative to offer retraining opportunities to their employees. A 2024 Express Employment Professionals-Harris Poll survey found that 68% of hiring managers intended to reskill their employees at some point during the year, up from 60% in 2021. While the U.S. Department of Labor updated its guidelines to encourage states to adapt their workplace development systems, Robertson argued that the government has not done enough over several decades to equip the workforce with needed skills for future jobs.
“Democrats and Republicans have not invested significantly in training [or] retraining or labor market activation programs that you need to match workers with jobs,” Robertson said. “That’s the obvious solution.”
Absent changes, economists say the employment slowdown will continue, but with greater concern about the U.S. economy’s ability to maintain growth.
“We need job growth to have a growing economy, and I think we need job growth to pay our debts,” Regets said. “I don’t know how you can create job growth with a shrinking workforce.”
