The Great Profit Shift: How Corporate America Captured a Record Share of the Economy While Workers Lost Ground
Corporate profits in the United States reached an all-time high of $3.41 trillion in the third quarter of 2025, according to Trading Economics, while employee compensation as a share of national income fell to 61.6% by the end of 2024, per the Federal Reserve Bank of St. Louis. The divergence represents the culmination of a decades-long structural transformation in how the American economy distributes its gains: wages and salaries comprised approximately 58.5% of U.S. GDP in 1970, but that figure has since dropped to roughly 51.7%, according to McGraw-Hill Education data citing Federal Reserve figures. This is not a temporary pandemic distortion or cyclical fluctuation. It is the new architecture of American capitalism, built through policy choices, global economic forces, and corporate financial engineering that systematically redirected national income from workers to shareholders.
The mechanism driving this shift operates through multiple channels that compound one another. Corporate tax cuts have helped corporations post higher profits, according to McGraw-Hill Education analysis. Quantitative easing by major central banks has helped corporates by lowering their borrowing costs, the same analysis found. Relatively low interest rates thanks to a global savings glut have further reduced corporate financing expenses. And globalization offers U.S. firms a wider source of profits that are harder for any government to tax, per McGraw-Hill Education. Each of these factors alone would boost corporate earnings; together, they have created a profit environment unprecedented in the postwar era. U.S. corporate profits have historically ranged between 5% to 7% of GDP from the end of World War II to around 2000, according to McGraw-Hill Education. Since the 2008-09 financial crisis, U.S. corporate profits have climbed to about 11% of GDP, the same source reported.
The Numbers Tell Two Different Stories
The data on corporate profits reveals a striking discrepancy that itself illuminates how economic measurement can obscure or reveal different aspects of the same phenomenon. Corporate profits as a share of national income were 16.2% in the last quarter of 2024, according to the Federal Reserve Bank of St. Louis. Yet the same period saw corporate profits described as approximately 11% of GDP, per McGraw-Hill Education. The difference reflects distinct measurement approaches: national income excludes depreciation and certain taxes included in GDP, making the profit share appear larger when measured against the smaller denominator. Both figures, however, point in the same direction. Corporate profits averaged 8.1% of national income for domestic nonfinancial industries over the 2010-2019 period, the St. Louis Fed reported. By the last quarter of 2024, domestic nonfinancial industry profits had risen to 11.2% of national income, a jump of more than three percentage points in just a few years.
The acceleration began with the pandemic but did not end with it. The surge in corporate profits as a share of national income began in late 2020, according to the Federal Reserve Bank of St. Louis. Corporate profits more than doubled from 2010 to 2024, the St. Louis Fed data shows. U.S. corporate profits reached approximately $4.0 trillion at the end of 2024, per the same source. The most recent quarterly data shows the trend continuing: corporate profits in the United States rose by 4.7% from the previous period to $3.412 trillion in Q3 2025, Trading Economics reported. That figure surged 10.8% compared to Q3 2024, the same source noted. Corporate profits rose above preliminary estimates of 4.4% in Q3 2025, with the final reading showing stronger gains than initially calculated.
Where the Money Came From
The recent increase in corporate profits was entirely driven by the real economy, according to the Federal Reserve Bank of St. Louis, distinguishing this profit surge from previous periods driven by financial sector gains. Profits from domestic financial industries remained fairly stable after the beginning of the pandemic, the St. Louis Fed found. Instead, four sectors accounted for the overwhelming majority of the gains: retail and wholesale trade, construction, manufacturing and health care accounted for 73% of the postpandemic rise in corporate profits, per the St. Louis Fed analysis. The concentration in these sectors reveals a profit surge built on the goods and services ordinary Americans purchase daily, from groceries to home repairs to medical care.
The retail trade industry exemplifies the transformation. Retail trade industry profits averaged $153 billion pre-COVID-19 and rose to $314 billion post-COVID-19, according to the Federal Reserve Bank of St. Louis. That represents a doubling of profits in a sector where workers notoriously earn low wages and face unpredictable scheduling. Retail trade industry profits rose from 1% of national income to 1.5% post-COVID-19, the St. Louis Fed reported. Wholesale trade followed a similar trajectory: wholesale trade industry profits rose from $132 billion to $247 billion post-COVID-19, per the St. Louis Fed. Construction and wholesale trade industry profits climbed from $68 billion to $168 billion post-COVID-19, the same source found. As a share of national income, construction and wholesale trade industry profits rose from 0.4% of national income to 0.8% post-COVID-19, according to the St. Louis Fed.
The Digital Acceleration
The COVID-19 pandemic accelerated the transition toward the digital economy, according to the Federal Reserve Bank of St. Louis, creating new profit opportunities for companies positioned to capture online spending while traditional businesses struggled. This structural shift helped explain why profits surged even as the broader economy experienced historic disruption. Companies that had invested in digital infrastructure before the pandemic found themselves capturing market share from competitors forced to close physical locations. The transition was not temporary: the profit gains persisted long after lockdowns ended and in-person commerce resumed, suggesting a permanent reallocation of economic activity toward firms with digital capabilities.
The changing structure of American business ownership has also contributed to the profit concentration. The number of private equity-backed companies in the U.S. has increased significantly in the past 25 years, according to McGraw-Hill Education. Simultaneously, the number of public companies listed on U.S. stock exchanges has declined over the past 25 years, the same source reported. This shift means more of the economy operates under private equity management, which typically prioritizes aggressive cost-cutting and profit extraction over long-term investment or worker compensation. The decline in public listings also means less transparency about corporate practices and compensation, as private companies face fewer disclosure requirements than their publicly traded counterparts.
How Corporations Locked In Their Gains
The profit surge did not happen by accident. Corporations actively positioned themselves to capture and retain gains through deliberate financial strategies. Many U.S. corporations converted much of their short-term revolving credit into long-term debt while interest rates were low, according to McGraw-Hill Education. This refinancing locked in favorable borrowing costs for years, insulating corporate balance sheets from subsequent interest rate increases that squeezed households and small businesses. The strategy represented a wealth transfer from future interest payments to current profits, enabled by the same Federal Reserve policies ostensibly designed to support the broader economy.
The most recent quarterly data shows corporations continuing to retain earnings rather than distribute them to shareholders or reinvest in workers. Undistributed profits jumped 14.9% in Q3 2025, versus 14% in the preliminary release, according to Trading Economics. Net dividends went up by only 0.1% in Q3 2025, the same as in the preliminary release, Trading Economics reported. The disparity between retained earnings growth and dividend growth suggests corporations are hoarding cash rather than returning it to shareholders or investing in expansion that might create jobs. Net cash flow with inventory valuation adjustment rose 6% in Q3 2025, versus 5.8% in the early estimate, per Trading Economics, indicating stronger cash generation than initially measured.
The Worker Side of the Ledger
While corporate profits reached historic highs, workers experienced the mirror image of the same transformation. Wages are near their lowest when measured as a share of gross domestic product, according to McGraw-Hill Education. Employee compensation as a share of national income averaged 61.8% over the 2010-2019 period, the Federal Reserve Bank of St. Louis reported. By the last quarter of 2024, that figure had fallen to 61.6%, per the St. Louis Fed. The decline may appear modest in percentage terms, but applied to a $28 trillion economy, even small shifts represent hundreds of billions of dollars annually redirected from workers to corporate profits.
The decline in labor share from 58.5% in 1970 to 51.7% currently is also seen across the global economy, from India to the E.U., according to McGraw-Hill Education. This global pattern suggests forces beyond any single country's policies are at work, including technological change, the decline of union power, and the increased mobility of capital relative to labor. Yet the American experience has been particularly pronounced. Corporate profits are the second-largest component of U.S. national income after employee compensation, the Federal Reserve Bank of St. Louis noted. The gap between first and second has been narrowing for decades, with each percentage point of national income shifting from wages to profits representing a fundamental reordering of who benefits from economic growth.
The Policy Architecture
The profit surge did not emerge from market forces alone. Policy choices at every level created the conditions for corporate earnings to capture an increasing share of national income. Corporate tax cuts have helped corporations post higher profits, McGraw-Hill Education reported. The 2017 Tax Cuts and Jobs Act reduced the corporate tax rate from 35% to 21%, directly boosting after-tax profits by allowing companies to retain more of their earnings. Subsequent efforts to raise corporate taxes have largely failed, leaving the lower rate in place as a permanent feature of the tax code.
Monetary policy played an equally important role. Quantitative easing by major central banks has helped corporates by lowering their borrowing costs, according to McGraw-Hill Education. The Federal Reserve's bond-buying programs, which expanded dramatically during the pandemic, pushed interest rates to historic lows. Corporations with access to capital markets could borrow at rates unavailable to small businesses or households, using cheap debt to fund share buybacks, acquisitions, and dividend payments. Relatively low interest rates thanks to a global savings glut have helped corporates by lowering their borrowing costs, McGraw-Hill Education found, suggesting the favorable financing environment resulted from both policy choices and structural economic factors.
The International Dimension
American corporations increasingly derive profits from global operations, complicating efforts to tax or regulate their earnings. Globalization offers U.S. firms a wider source of profits that are harder for any government to tax, according to McGraw-Hill Education. Multinational corporations can shift profits to low-tax jurisdictions through transfer pricing, intellectual property arrangements, and other legal mechanisms that reduce their effective tax rates below the statutory rate. The result is a growing gap between where economic activity occurs and where profits are reported.
The pandemic disrupted some international profit flows while reinforcing others. Dividends from abroad fell after the beginning of the pandemic, according to the Federal Reserve Bank of St. Louis, as global supply chain disruptions and lockdowns affected overseas operations. Yet the domestic profit surge more than compensated for reduced international earnings, with the St. Louis Fed noting that the recent increase in corporate profits was entirely driven by the real economy rather than financial flows. U.S. corporate profits, the budget and trade deficits are near historic or all-time highs, McGraw-Hill Education reported, suggesting the profit boom coincides with broader macroeconomic imbalances that may prove unsustainable.
The Historical Context
The current profit levels represent a departure from postwar norms that persisted for half a century. U.S. corporate profits have historically ranged between 5% to 7% of GDP from the end of World War II to around 2000, according to McGraw-Hill Education. The period from 1945 to 1980 saw relatively stable profit shares alongside rising wages, expanding middle-class prosperity, and declining inequality. That equilibrium began shifting in the 1980s with deregulation, tax cuts, and the decline of union membership, but the changes accelerated dramatically after the 2008 financial crisis and again after the pandemic.
Corporate profits in the United States averaged $672.67 billion from 1947 until 2025, according to Trading Economics. The current level of $3.41 trillion represents more than five times that historical average, reflecting both economic growth and the increasing share of output captured by corporate earnings. Corporate profits recorded a record low of $9.96 billion in Q1 1947, Trading Economics reported, providing a baseline that illustrates the scale of transformation over eight decades. The trajectory has been consistently upward, with occasional cyclical declines during recessions quickly reversed by policy interventions designed to restore corporate profitability.
The Accounting Adjustments
Understanding corporate profit data requires attention to technical adjustments that can significantly affect reported figures. Corporate profits consist of net dividends and undistributed profits from current production for all financial and nonfinancial firms required to file federal corporate tax returns, according to the Federal Reserve Bank of St. Louis. This definition excludes certain business forms like partnerships and sole proprietorships, potentially understating total business income while capturing the earnings of the largest and most profitable enterprises.
Inventory valuation and capital consumption adjustments raised U.S. corporate profits by 0.4% of national income over the 2010-2019 period, the St. Louis Fed reported. These technical adjustments account for the difference between historical cost accounting used in tax returns and current cost measures preferred by economists. Inventory valuation and capital consumption adjustments were more noticeable over the past two years since the pandemic's onset, the St. Louis Fed noted, suggesting the rapid price changes during the inflationary period created larger gaps between book profits and economic profits. Data on U.S. Corporate Profits was last updated in February 2026, according to Trading Economics, indicating the figures reflect the most current available information.
The Quarterly Trajectory
The most recent data shows corporate profits continuing their upward march with no signs of reversal. Corporate profits increased to $3,411.70 billion in Q3 2025 from $3,259.41 billion in Q2 2025, according to Trading Economics. The quarter-over-quarter increase of $152 billion represents a pace of profit growth that would add more than $600 billion annually if sustained. Corporate profits reached an all-time high of $3,411.70 billion in Q3 2025, Trading Economics confirmed, with each successive quarter setting new records.
Deutsche Bank strategist Jim Reid published a recent report on U.S. corporate profits, according to McGraw-Hill Education, suggesting the profit surge has attracted attention from major financial institutions tracking its implications for markets and the broader economy. The sustained profit growth has supported stock market valuations even as interest rates rose, with investors betting that corporate earnings power can withstand tighter monetary policy. Whether that bet proves correct depends on whether the structural factors supporting profits persist or whether competitive pressures, policy changes, or economic slowdowns eventually compress margins back toward historical norms.
What Comes Next
The profit-wage divergence shows no signs of self-correcting through market forces alone. The mechanisms that enabled the profit surge remain in place: corporate tax rates remain at their post-2017 lows, interest rates have begun declining from their recent peaks, and globalization continues to offer profit-shifting opportunities despite rhetorical commitments to reshoring. Workers lack the bargaining power to claim a larger share of productivity gains, with union membership at historic lows and labor market institutions weakened by decades of policy choices favoring employers.
The data reveals an economy that has become exceptionally good at generating corporate profits while struggling to translate that success into broadly shared prosperity. Corporate profits more than doubled from 2010 to 2024, according to the Federal Reserve Bank of St. Louis, a period during which median household income grew far more slowly. The gap between corporate success and worker stagnation represents the central economic tension of the current era, one that shapes political debates, consumer behavior, and social cohesion. Whether the profit share continues rising, stabilizes at current levels, or eventually declines will depend on policy choices yet to be made and political coalitions yet to form. The numbers themselves offer no prediction, only a stark accounting of where the money has gone and who has been left behind.