Corporate profits in the United States reached record levels in the second quarter of 2026, while the share of national income going to workers through wages and benefits dropped to its lowest point since the 1950s, according to recent data from the Bureau of Economic Analysis. This growing disparity highlights a widening economic divide amid rising political tensions across the country.

Pre-tax corporate earnings hit an annualized $4.8 trillion in the April-to-June period, accounting for 18 percent of the national income, the highest proportion since the post-World War II era. Meanwhile, compensation for employees—including wages and benefits—fell to approximately 60 percent of the total income, marking historic lows.

Economists point to a long-term shift in income distribution as capital gains and corporate profits have increasingly outpaced wages. “Regardless of what measure you look at, workers, in terms of employee compensation, have been receiving an increasingly small share of national income over time,” said Abiel Reinhart, an economist at JPMorgan. The declining wage share corresponds with a rise in corporate profit margins, redirecting income toward business owners and shareholders.

This economic pattern is fueling political dissatisfaction amid a backdrop of strong stock market performance. Gains have been especially pronounced among major technology firms benefiting from artificial intelligence advancements, as well as oil companies profiting from elevated fuel prices linked to geopolitical tensions involving Iran. While robust corporate earnings have bolstered retirement accounts through dividends and rising stock prices, these benefits disproportionately flow to wealthier Americans who derive much of their income from investments.

Rising inflation has further eroded the purchasing power of typical workers, with real hourly earnings declining by 0.2 percent in July compared with the previous year. The resulting income gap poses challenges for middle- and lower-income households more reliant on wages than investment returns.

“The gains that the top is seeing far, far, far outpace the gains — if any — that the bottom is seeing,” said Elizabeth Pancotti, vice president of policy at the Groundwork Collaborative think tank. “What we’re seeing today is that there are really two separate economies.”

Policy changes under President Donald Trump, including significant tax cuts that favor corporations and affluent individuals, along with reductions in social safety net programs like food assistance, have contributed to these dynamics. The increasing economic inequality is provoking a political backlash, with growing support for populist movements across the political spectrum.

Both major parties have adopted populist tones, while progressive groups such as the Democratic Socialists of America have gained influence in recent primary elections, exemplified by Zohran Mamdani’s victory as mayor of New York City following his critiques of corporate influence.

A report by the Institute for Policy Studies highlights the disparity in compensation growth between executives and low-wage workers: from 2019 to 2025, chief executives of major low-wage employers saw their pay increase by 41 percent, while median worker wages grew just 21 percent—below the 26 percent rise in inflation over the same period.

“There’s been for several decades a shift in the balance of power from labor to capital in the US,” said Anna Stansbury, an economics professor at MIT Sloan School of Management. The ongoing divergence in income shares underscores the challenges facing efforts to address inequality in the American economy.