A new low for American workers

Workers in the United States are earning a historically low share of the value they produce, according to new data released by the Bureau of Labor Statistics (BLS). The BLS estimates that the labor share of Gross Domestic Product (GDP) “was 52.8 percent in the second quarter of 2026.” This is the lowest level that the BLS has seen since it first began recording labor share in 1947.

Labor share has been on a downward trend for months. In the first quarter of 2026, labor share was 53.7%, which was, at the time, a historic low. Over the last 25 years, the labor share of income has plummeted. In the first quarter of 2000, the labor share was 63.9%.

But while labor’s share of GDP is collapsing, U.S. corporate profits are surging. In the second quarter of 2026, corporate profits increased 9% compared to the first quarter of the year, according to data released in August by the Bureau of Economic Analysis (BEA). Corporate profits “increased $400.9 billion in the second quarter, compared with an increase of $74.4 billion in the first quarter,” according to the BEA.

This may be one reason why, despite there being a relatively low unemployment rate and some GDP growth, 76% of Americans rated the economic conditions in the U.S. as “poor” or “only fair,” according to a July Pew Research survey. While the economy is growing, workers are not benefiting from economic growth.

There are many factors that may be driving down wages relative to GDP, including technological advancements and accelerated globalization. In recent years, more workers are also relying on gig work, and the share of workers who are part of a union has also declined drastically in recent decades.

Instead of addressing the problem, the second Trump administration is taking steps that may push the labor share of GDP even lower.

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A costly new rule

In February, the Trump administration proposed a new rule that would make it easier for employers to classify workers as independent contractors. Classifying workers as independent contractors is usually cheaper for businesses and detrimental to workers. According to Reuters, “[e]mployees can cost businesses up to 30% more” than independent contractors.

The new rule would formally rescind a 2024 Biden administration rule that made it more difficult to classify employees as independent contractors by using a rigorous set of standards to determine whether a worker is truly independent. In May 2025, the Trump administration announced that it would no longer enforce the rule.

The Trump administration rule would replace the Biden administration standards with a more permissive “economic reality” test to decide if a worker is “economically dependent on an employer for work.” As a practical matter, it would likely thwart efforts to classify ride-share drivers, delivery drivers, and construction workers as employees.

In a statement, then-Secretary of Labor Lori Chavez-DeRemer argued that “tens of millions of Americans who work as independent contractors are helping drive the Golden Age of the American economy” and that the “proposed rule seeks to protect these workers’ entrepreneurial spirit and simplify compliance for American job creators navigating a modern workplace.”

But while the proposed rule would be a windfall for businesses, workers who are classified as independent contractors “lose out on critical protections, benefits, and labor rights including minimum wage, overtime pay, unemployment insurance, the right to form a union, and anti-discrimination protections in most states,” according to the Economic Policy Institute (EPI). Independent contractors must also “bear the full financial costs of Social Security and Medicare contributions.”

A 2025 EPI analysis found that a typical construction worker loses “as much as $19,526 per year in income and job benefits” when classified as an independent contractor instead of an employee. A truck driver would lose up to $21,532 per year, and a home health aide would lose as much as $10,246 per year.

The National Employment Law Project (NELP) opposed the proposed rule, arguing that classifying employees as independent contractors “degrades wages and working conditions, particularly in fast-growing, low-paying, and labor violation—prone occupations and industries.”

Gutting the NLRB

The second Trump administration has also sidelined the National Labor Relations Board (NLRB), the agency that protects workers’ rights, investigates unfair labor practices, and conducts union elections. Research has shown that “high rates of unionization are consistently associated with higher wages and better working conditions for both union and nonunion workers,” according to the EPI.

In an unprecedented move, President Trump fired NLRB board member Gwynne Wilcox shortly after he began his second term. (Wilcox sued the Trump administration, but an appeals court ruled in December 2025 that Trump had acted lawfully.) Wilcox’s removal left the board with only two members, and therefore without the necessary three-member quorum.

This left the NLRB unable to issue any new decisions for nearly a year. In that time, workers were stuck waiting for decisions on cases concerning unfair labor practices or potentially illegal firings. Any decision made by an administrative law judge can be appealed to the NLRB for a final decision, and every appeal case was stuck in limbo. Two new members were finally confirmed to the board in December 2025.

The NLRB is increasingly staffed with officials who are openly hostile to labor rights. After firing NLRB General Counsel Jennifer Abruzzo, for example, Trump appointed Crystal Carey for the role. Carey was formerly a partner at a law firm that “is pursuing the legal challenge that the NLRB is unconstitutional,” according to the EPI.

The board is now dealing with a backlog of cases. During the second Trump administration, the NLRB has been more likely to dismiss cases altogether. An analysis by the Center for American Progress (CAP) found that from the beginning of January 2025 to April 29, 2026, the likelihood that the NLRB dismissed a case alleging unfair labor practices filed by a union was 14.2 percentage points higher than in 2024.

A separate analysis by CAP found that the volume of private sector union elections overseen by the NLRB plunged after the Trump administration’s efforts to weaken the agency. In 2025, the “NLRB oversaw 1,498 union elections,” which is a “30 percent drop from 2024.” Worker participation in NLRB elections was also down, with “59,000 fewer workers participat[ing] in NLRB-run elections in 2025, a 42 percent decline from the previous year.”