Top Economists Warn: Gap Between Corporate Profits and Worker Wages Reaches Historic Record

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In the battle between capital and labor, workers’ positions have fallen significantly behind, raising serious concerns about the trust foundation that underpins the economy and society.

Diane Swonk, Chief Economist and Managing Director at KPMG, highlighted in her latest report the troubling gap between corporate profits and workers’ income.

The report shows that corporate profits as a share of U.S. GDP have soared from 8% in 1982 to 15.85%, while employee compensation as a share of GDP has dropped sharply from 66.6% in 1982 to 61.9%.

Although the labor share in the economy has previously been lower than it is now, the overall trend is downward, and the gap with corporate profits has reached its highest level since World War II.

Last week, Swonk posted on social media: “The chart I presented in my recent ‘Economic Compass’ report still makes me uneasy. Some friends called it a ‘revolutionary chart.’ While unsettling, it hits the core. Increasing inequality will further destabilize society and the economy.”

She added that this disparity helps explain the disconnect between the apparent economic performance on paper and the actual experiences of most Americans.

In fact, despite data showing cooling inflation, steady income growth, and resilient consumer spending, detailed figures reveal severe polarization. For example, since the pandemic began, the wealthiest 20% of households have contributed nearly all of the U.S. consumption growth, while the bottom 80% are barely keeping up with inflation.

Today, Americans face a cost-of-living crisis, with prices for food, electricity, insurance, healthcare, childcare, and housing rising across the board.

Swonk warned: “This reflects a gradual erosion of trust over decades, with a tide of betrayal surging. Our economic narrative has already cracked.”

She pointed out in her report that this loss of trust has spread globally and persisted for decades, especially pronounced in developing economies over the past year.

Meanwhile, the AI revolution and Trump’s tariffs have intensified public anxiety over job security.

Swonk wrote: “Before the productivity gains from AI even materialize, CEOs are already citing AI as a reason to freeze hiring and lay off workers. This approach may do more harm than good, fueling growing public resistance to AI.”

Certainly, some positive factors could benefit workers and the overall economy: Trump’s tax cuts could provide short-term boosts, the World Cup may revive tourism, inflation is expected to steadily decline, and large-scale AI capital expenditures will continue to support GDP growth.

However, she noted, investor sentiment remains tense, economic policy remains uncertain, and the real estate market continues to languish.

Swonk summarized: “The result is an economy that appears resilient but is actually increasingly fragile. Growth is maintained, but the ties supporting the labor market, investment activity, and global cooperation are breaking. Workers are more anxious, investors more blindly optimistic, and markets… more vulnerable to shocks than headlines suggest.”

Her warning aligns with Nobel laureate Daron Acemoglu’s long-standing discussions on the roots of economic and political decline.

In a recent interview with Fortune magazine’s Jake Angelo, Acemoglu stated that the U.S. is heading toward a bleak future and emphasized two key shifts needed in AI development to prevent further economic decline: curbing economic inequality and reducing AI’s impact on jobs.

Acemoglu said: “If we continue down this path of destroying jobs and worsening inequality, America’s democracy will struggle to survive.” (Fortune Chinese)

Translator: Zhong Huiyan - Wang Fang

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