US Corporate Profits Hit Record as Worker Share Sinks to 1950s Low

US corporate profits just printed a record, but the share going to workers is at its lowest level in roughly seven decades. The split is fueling the same divide that has driven equities higher while consumer sentiment stays sour.

The headline numbers

According to the Financial Times, pre-tax earnings hit an annualised $4.8tn in the second quarter, or 18 per cent of national income, according to Bureau of Economic Analysis data, the highest share since the aftermath of the Second World War.

Employees’ share from wages and benefits fell to 60 per cent, the lowest level since the 1950s. JPMorgan economist Abiel Reinhart noted that the share of wages in total national income keeps getting smaller, with a growing chunk showing up in corporate profit margins instead.

Why the gap keeps widening

Economists estimate inflation is outpacing wages, with real hourly earnings down 0.2% over the past year. That is the mechanical driver behind the ebullient tape and the cranky consumer.

The FT notes that the tax cuts introduced by President Donald Trump also primarily benefit wealthy Americans with high investment income, which further tilts the income mix toward capital over labor.

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Concentrated at the top

The profit pool is not evenly spread. Earnings at the 500 biggest US firms rose 28% in the first quarter from a year earlier, the fastest pace since 2021, with profit margins reaching 14.8%.

The seven technology giants known as the Magnificent 7, Apple, Microsoft, Nvidia, Alphabet, Amazon, Meta and Tesla, grew their profits 63%. That is the engine keeping index-level margins near record highs even as small caps and lower-income consumers struggle.

The market read-through

Fat margins at the top of the cap stack are a tailwind for index earnings and buybacks, but a squeezed worker share is a headwind for cyclicals and discretionary names that depend on real wage growth. It is also political tinder, which matters for tax policy risk into the next cycle.

Options market and stocks to watch

Watch for continued margin-driven flow in the mega-cap complex, and for weakness in wage-sensitive consumer names.

• NVDA: watch for whether AI-driven margin expansion keeps feeding the Mag 7 profit share.
• AAPL: watch for how buyback capacity from record profits shapes flow into year-end.
• WMT: watch for signs that a squeezed low-end consumer shifts trade-down behavior.
• MCD: watch for weakness in discretionary spend if real wages keep slipping.
• XRT: watch the retail ETF as a broader gauge of wage-sensitive consumer stress.

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