The Capital-Labor Split

The capital-labor split measures the share of national income that flows to the owners of capital (profits, rents, dividends, interest, capital gains) versus the share that flows to workers (wages, salaries, benefits). In the United States, labor's share has declined from approximately sixty-four percent in the early 1980s to approximately fifty-seven percent in the early 2020s — a seven-percentage-point shift representing trillions of dollars redirected from workers to capital owners. The causes are debated: globalization, declining unionization, changes in market structure, the rise of superstar firms. The direction is not. Capital's share has been rising for forty years. The AI transition is accelerating this shift through a mechanism specific to AI economics: the cost of AI augmentation is trivial relative to the productivity gain, generating an enormous surplus whose default allocation flows to shareholders unless institutional mechanisms redirect it.