In the third quarter of 2025, the share of gross domestic income that goes to wages and benefits to employees will fall to 51.4%, from 58% in 1980, according to data from the US Commerce Department, as stated in The Wall Street JournalChief economic commentator, Greg Ip. During the same period, corporate income, or the remaining money used to grow a business or pay owners, increased, reaching almost 12% of the share of gross domestic income in the third quarter, up from 6%.

Axios run these numbers, and calculate the reduced wages as a share of gross domestic income that adds up to $12,000; as in, that’s how little each year the average American takes home as a result of this dynamic. This amounts to about $2 trillion in annual compensation for working Americans. That means almost a 20% salary increase over the annual median income.

“There’s no question that contributes to inequality and kind of stagnation in median income,” Harry J. Holzer, a labor economist at Georgetown University, said. luck.

He attributed part of this shift to the weakening of the political power of the workers. “(It’s a) combination of automation and globalization that benefits the owners of capital more than workers and the decline of these types of equalizing institutions like collective bargaining.”

But you don’t have to listen to Greg Ip, Axios or luck: the government itself admits that something has changed in the composition of the middle class.

A long-term pattern

A recent report released by the Congressional Budget Office reveals the extent of the growing income divide between the nation’s highest earners and the middle class. Between 1979 and 2022, the top 1% of households doubled their share of the economic pie from 7% in 1979 to 14% in 2022, even after accounting for transfers and taxes. Meanwhile, the share of income among the “middle three” income quintiles — households earning between $63,000 and $121,000 annually — fell six percentage points after the transfer and taxes.

When you zoom in, the contrast among the ultrarich paints a starker picture. While income for the highest quintile of earners, those earning more than $307,000, has more than doubled since 1979, income for the top 0.01% of earners has grown more than sevenfold. Of course, the country as a whole grew structurally richer, but it came with a marked increase in the richest who took the lion’s share of the benefits.

The CBO report found that market income, particularly capital gains, was the main driver of the disparity. However, automation is also widening the divide. A 2022 MIT study found that automation has been the main driver of income inequality since the 1980s, with automation replacing largely less-educated workers. Yet that study was released before the advent of AI, which is only expected to exacerbate the divide between corporate profits and labor wages and benefits.

The development of AI is expected to replace workers regardless of the level of education. Anthropic CEO Dario Amodei thinks AI can be deleted half of all entry-level white-collar jobs, and unemployment rises to 20% within the next five years. And college graduates enter the toughest job market over the years, thanks in part to entry-level job automation.

“If we leave it to the markets, AI can be this labor-saving technology that’s not very good for workers,” Holzer said.

Last year alone, about 55,000 job layoffs were tied to the development of AI, according to outplacement firm Challenger, Gray and Pasko. Many of the layoffs occurred in the tech industry. Microsoft the boy 9,000 jobs, which refers to the change in strategy due to AI. and Salesforce CUT OFF 4,000 customer service jobs in an AI push.

Microsoft recently released a list of the 40 jobs most vulnerable to AI, with translators, sales reps, historians, and writers considered some of the jobs most affected by generative AI.

To prevent a cataclysmic wave of unemployment from AI automation, Holzer suggested the government provide guardrails and incentives for tech companies to ensure that building AI is human first. “Government support through research grants and things like that might try to reward a more labor-augmenting or human-centered type of AI,” Holzer said.

“I think it’s very reasonable in an age of AI to think about how it’s going to continue and what we can do about it. I think that’s important.”