Record Corporate Profits Claim Largest Share of National Income in Modern History as Worker Compensation Hits Historic Lows
Corporate profits reached 16.2% of national income in the last quarter of 2024, the highest share in modern American economic history, according to the Federal Reserve Bank of St. Louis. At the same time, employee compensation fell to 61.6% of national income, near its lowest point on record. This divergence represents not a temporary pandemic distortion but the acceleration of a decades-long structural shift in how the American economy distributes the wealth it generates. The question facing policymakers is no longer whether this redistribution is occurring, but whether the policy choices that enabled it should continue.
The scale of this transformation becomes clear in historical context. U.S. corporate profits largely ranged between 5% to 7% of GDP from the end of World War II to around 2000, according to McGraw-Hill Education analysis. Since the 2008-09 financial crisis, profits climbed to about 11% of GDP, per the same analysis. The surge to the current 16.2% began in late 2020, the St. Louis Fed reported, meaning the economy has undergone in five years a redistribution that took the previous sixty years to approach. Corporate profits in 2024 were more than double what they were in 2010, according to St. Louis Fed data, while worker compensation as a share of national income dropped from an average of 61.8% over the 2010-19 period to 61.6% in late 2024. That 0.2 percentage point decline may sound marginal, but applied to a roughly $25 trillion economy, it represents approximately $50 billion annually shifted from paychecks to corporate balance sheets.
The Mechanism: How Policy Choices Tilted the Playing Field
Deutsche Bank strategist Jim Reid notes that U.S. corporate profits, the budget and trade deficits are near historic or all-time highs, according to McGraw-Hill Education reporting. His analysis identifies several policy mechanisms that enabled this concentration. Corporate tax cuts have helped corporations post higher profits, per McGraw-Hill Education analysis. When companies retain more of their earnings rather than paying taxes, those funds flow to shareholders and executives rather than public services or worker-benefiting programs. The effective tax burden on corporations has declined substantially over the past two decades, and the 2017 tax overhaul accelerated this trend. Each percentage point reduction in corporate taxes translates directly to higher after-tax profits without any corresponding increase in productivity or worker compensation.
Quantitative easing by major central banks has helped corporates by lowering their borrowing costs, according to McGraw-Hill Education analysis. When the Federal Reserve and other central banks purchased trillions in bonds to keep interest rates near zero, corporations gained access to historically cheap capital. Many U.S. corporations converted much of their short-term revolving credit into long-term debt while interest rates were low, per McGraw-Hill Education reporting. This allowed companies to lock in favorable borrowing terms for years or decades, reducing their cost of capital while workers saw no equivalent benefit. The cheap money also inflated asset values, benefiting shareholders and executives with stock-based compensation while doing little for workers whose wealth is concentrated in wages rather than investments.
Relatively low interest rates thanks to a global savings glut have helped corporates by lowering their borrowing costs, McGraw-Hill Education noted. This structural advantage compounds over time. A company borrowing at 2% rather than 6% can afford to buy back more shares, acquire competitors, or simply hold cash, all of which benefit owners rather than employees. The Federal Reserve's extended period of near-zero rates following the 2008 crisis, and again during the pandemic, created a decade-plus environment where capital was cheap and labor had little leverage to demand higher wages.
The Globalization Advantage: Mobile Profits, Immobile Workers
Globalization offers U.S. firms a wider source of profits that are harder for any government to tax, according to McGraw-Hill Education analysis. This asymmetry is central to understanding the profit-wage divergence. Corporations can shift production, intellectual property, and reported earnings across borders to minimize tax obligations and labor costs. Workers cannot. A factory can move to a lower-wage country; the workers it employed cannot follow. A company can book profits in Ireland or the Cayman Islands; the American workers who generated those profits remain subject to U.S. taxes on their wages. This mobility gap gives corporations structural leverage that compounds over time, allowing them to capture an ever-larger share of the value their workers create.
The decline in labor share is seen across the global economy, from India to the more established economies of the E.U., per McGraw-Hill Education reporting. This suggests the phenomenon is not unique to American policy failures but reflects broader structural changes in how global capitalism allocates returns between capital and labor. However, the U.S. has experienced one of the most dramatic shifts, indicating that American policy choices have amplified rather than mitigated these global trends. Jim Reid notes that wages are near their lowest when measured as a share of gross domestic product, according to McGraw-Hill Education analysis. This is not an accident of market forces but the predictable result of policy decisions that favored capital mobility while restricting labor mobility, cut corporate taxes while maintaining payroll taxes, and prioritized shareholder returns over worker compensation.
Where the Money Went: Sector-by-Sector Breakdown
Retail and wholesale trade, construction, manufacturing and health care accounted for 73% of the postpandemic rise in corporate profits, according to the St. Louis Fed. This concentration reveals which industries captured the most value during the pandemic recovery. Retail trade industry profits averaged $153 billion pre-COVID-19, per St. Louis Fed data. Post-pandemic, retail trade industry profits rose to $314 billion, the St. Louis Fed reported. That represents a doubling of profits in an industry that employs millions of workers who saw no equivalent doubling of their wages. The mechanism here is straightforward: pandemic disruptions allowed retailers to raise prices, and those price increases flowed to profits rather than worker compensation.
Construction and wholesale trade industries' profits climbed from $68 billion to $168 billion, according to the St. Louis Fed. Construction and wholesale trade profits rose from 0.4% of national income to 0.8%, per the same source. Wholesale trade industry profits rose from $132 billion to $247 billion, St. Louis Fed data shows. Retail trade profits rose from 1% of national income to 1.5%, according to the St. Louis Fed. These sector-specific increases demonstrate that the profit surge was not evenly distributed across the economy but concentrated in industries that could raise prices during supply chain disruptions and labor shortages. The workers in these industries, despite their "essential" status during the pandemic, captured little of the value they created.
Profits from domestic nonfinancial industries averaged 8.1% of national income over the 2010-19 period, according to the St. Louis Fed. By the last quarter of 2024, profits from domestic nonfinancial industries rose to 11.2%, per the same source. This 3.1 percentage point increase in the profit share of nonfinancial industries alone represents hundreds of billions of dollars annually that shifted from other claimants on national income, primarily workers, to corporate owners. The digital economy transition likely helped firms, particularly those in the retail and wholesale trade industries, produce more with fewer resources, the St. Louis Fed noted. The COVID-19 pandemic accelerated the transition toward the digital economy, per St. Louis Fed analysis. This technological shift allowed companies to maintain or increase output while reducing labor costs, with the productivity gains flowing to profits rather than wages.
The Current Numbers: All-Time Highs
Corporate profits reached $3.412 trillion in the third quarter of 2025, according to Trading Economics, citing U.S. Bureau of Economic Analysis data. The all-time high for U.S. corporate profits is $3,411.70 billion in Q3 2025, per Trading Economics. Corporate profits totaled $4.0 trillion at the end of 2024, the St. Louis Fed reported. U.S. corporate profits have risen markedly to near all-time highs since the start of the COVID-19 pandemic, according to St. Louis Fed analysis. These figures represent the culmination of trends that began decades ago but accelerated dramatically during the pandemic. Corporate profits in the United States averaged $672.67 billion from 1947 until 2025, per Trading Economics. The current $3.4 trillion quarterly figure is more than five times that historical average, indicating the scale of the structural shift.
Corporate profits in the United States rose by 4.7% from the previous period in Q3 2025, according to Trading Economics. The Q3 2025 corporate profit figure of $3.412 trillion exceeded preliminary estimates of 4.4%, per the same source. Corporate profits surged 10.8% compared to the corresponding period of the previous year, Trading Economics reported. This growth rate, more than double the rate of overall economic expansion, indicates that corporations continue to capture a disproportionate share of economic gains. Undistributed profits jumped 14.9% in Q3 2025, according to Trading Economics. Net cash flow with inventory valuation adjustment rose 6% in Q3 2025, per the same source. These retained earnings provide corporations with capital for investment, acquisitions, or share buybacks, all of which benefit owners rather than workers.
The Structural Shift in Corporate America
The number of private equity-backed companies in the U.S. has increased significantly in the past 25 years, according to McGraw-Hill Education reporting. Simultaneously, the number of public companies listed on U.S. stock exchanges has declined in the past 25 years, per the same analysis. This shift from public to private ownership has implications for profit distribution. Private equity firms are explicitly designed to extract maximum value for investors, often through cost-cutting that includes workforce reductions and wage suppression. The decline in public companies also means less transparency about corporate profits and executive compensation, making it harder for workers and policymakers to understand how value is being distributed.
Corporate profits represents the portion of the total income earned from current production that is accounted for by U.S. corporations, according to the Bureau of Economic Analysis. Corporate profits are the second-largest component of U.S. national income after employee compensation, the St. Louis Fed noted. The fact that profits have grown to 16.2% of national income while compensation has fallen to 61.6% represents a fundamental reordering of how the economy rewards different contributions. Profitability provides a summary measure of corporate financial health, per BEA analysis. By this measure, American corporations have never been healthier. But corporate health and worker health are no longer aligned as they were in the postwar period when rising profits generally meant rising wages.
Profits are a source of retained earnings, providing much of the funding for capital investments that raise productive capacity, according to BEA analysis. This is the traditional justification for allowing corporations to retain profits rather than distributing them to workers or the government. The theory holds that retained earnings fund investment, investment raises productivity, and productivity gains eventually flow to workers through higher wages. But the data of the past two decades suggests this transmission mechanism has broken down. Corporations have retained record profits while investment as a share of GDP has remained flat and worker wages have stagnated. The profits are being retained, but they are not funding the productivity-enhancing investments that would justify their retention.
The Accounting Details: What the Numbers Include
The NIPAs are prepared by the Bureau of Economic Analysis, according to BEA documentation. Corporate profits estimates are an integral part of the national income and product accounts, per the same source. Data on U.S. corporate profits was last updated in February 2026, Trading Economics reported. The source of the corporate profits data is the U.S. Bureau of Economic Analysis, according to Trading Economics. Corporate profits is one of the most closely watched U.S. economic indicators, per BEA analysis. These methodological details matter because they establish the credibility of the underlying data. The profit figures are not estimates by advocacy groups or think tanks with ideological agendas; they are official government statistics produced by career civil servants using consistent methodologies.
Inventory valuation and capital consumption adjustments were more noticeable over the past two years, according to the St. Louis Fed. The preliminary estimate for net cash flow with inventory valuation adjustment was 5.8%, per Trading Economics. The preliminary estimate for undistributed profits was 14%, according to the same source. Net dividends went up by 0.1% in Q3 2025, Trading Economics reported. Net dividends figure of 0.1% matched the preliminary release, per the same source. These technical adjustments ensure that the profit figures reflect actual economic activity rather than accounting artifacts. The consistency between preliminary and final estimates suggests the underlying data is reliable and the trends are real rather than statistical noise.
Historical Perspective: From Record Lows to Record Highs
The record low for U.S. corporate profits was $9.96 billion in Q1 1947, according to Trading Economics. From that postwar nadir to the current $3.4 trillion represents a 340-fold increase in absolute terms. Even adjusting for inflation and economic growth, the profit share of national income has more than doubled from its postwar norm. This historical perspective reveals that the current profit levels are not a return to some natural equilibrium but a departure from the economic arrangements that characterized the most broadly prosperous period in American history. The postwar decades, when profits ranged from 5% to 7% of GDP, were also the decades of rising middle-class living standards, declining inequality, and broad-based economic growth. The current period of record profits has coincided with stagnant wages, rising inequality, and economic growth that benefits primarily those who already own capital.
Wages and salaries comprised approximately 58.5% of US GDP in 1970, according to McGraw-Hill Education analysis. The decline from 58.5% to the current 61.6% of national income (a slightly different measure than GDP share) might seem to suggest improvement, but the methodological differences obscure a consistent trend of declining worker share across multiple measures. What is clear from all available data is that the relationship between profits and wages has fundamentally changed. In the postwar period, rising profits generally meant rising wages because corporations needed to attract and retain workers in a tight labor market with strong unions. Today, corporations can post record profits while holding wages flat because globalization, automation, and weakened labor institutions have shifted bargaining power decisively toward capital.
The Policy Implications: Choices, Not Inevitabilities
The profit-wage divergence is often presented as an inevitable result of technological change or globalization, forces beyond the control of policymakers. But the evidence suggests otherwise. The specific policy choices that enabled profit concentration, including corporate tax cuts, extended periods of near-zero interest rates, trade agreements that protected capital mobility while restricting labor mobility, and the erosion of antitrust enforcement, were all decisions made by elected officials and appointed regulators. Different choices would have produced different outcomes. Countries with stronger labor protections, more progressive tax systems, and more aggressive antitrust enforcement have experienced less dramatic profit-wage divergence than the United States.
The policy levers available to address this divergence are well understood. Tax policy could be restructured to reduce the advantage of capital income over labor income. Antitrust enforcement could be strengthened to reduce the market power that allows corporations to raise prices without competitive pressure. Labor law could be reformed to restore worker bargaining power. Monetary policy could prioritize full employment over inflation control. None of these changes would be easy or uncontested, but all are within the realm of democratic choice. The current distribution of national income between profits and wages is not a law of nature; it is the result of policy choices that can be revisited and revised.
What the data reveals is a fundamental question about the purpose of economic policy. For decades, the assumption has been that policies favoring corporate profitability would eventually benefit workers through investment, job creation, and productivity growth. The evidence of the past twenty years suggests this assumption was wrong, or at least incomplete. Record corporate profits have not produced record worker prosperity. The transmission mechanism has broken down. Profits are being retained, but they are flowing to shareholders and executives rather than workers and communities. The policy framework that produced this outcome deserves reconsideration, not because profits are inherently bad, but because an economy that generates record profits while worker compensation hits historic lows is not serving the broad public interest that economic policy is supposed to advance.