Record profits, flat paychecks
What's really happening to workers' share of the economy
U.S. corporate profits hit a record 18% share of national income in Q2 2026 while workers' share fell to its lowest level since the 1950s.
Federal enforcement against corporate misconduct has dropped sharply since 2025, even as corporate profits hit record highs.
Minnesota's worker protections like minimum wage indexing, paid leave, wage theft enforcement help, but we need a Federal government that isn’t working against the people’s best interest.
In the second quarter of 2026, U.S. corporations reported $4.8 trillion in pre-tax profits. This is equal to 18% of the country's entire national income, the highest share recorded since the years following World War II. Over that same period, the portion of national income going to workers in wages and benefits fell to 60%, the lowest level since the 1950s. Real hourly earnings, adjusted for inflation, actually dropped 0.2% compared with a year earlier.
Corporate profits are stronger than they've been in eighty years, whilea full-time worker's paycheck buys slightly less than it did twelve months ago. This post looks at how executive pay compares with worker pay right now, and what worker protections already exist at the state level.
What's driving the record profit share
A growing share of executive compensation now comes as stock awards rather than salary. Roughly $200 billion in what would once have been counted as worker pay has moved into corporate profits in the form of stock-based compensation, and that alone may explain about a third of the long-run decline in labor's share of national income. Stock awards let top earners collect pay that gets recorded as profit rather than wages, in part because that structure carries preferential tax treatment.
Corporate profits as a share of U.S. GDP have climbed from 8% in 1982 to nearly 16% today, according to data highlighted by KPMG's chief economist. That's a four-decade trend, not a single bad quarter for workers.
How CEO pay compares with worker pay right now
The AFL-CIO's 2026 Executive Paywatch report found the average S&P 500 CEO made $22.8 million in 2025, or 312 times the median worker's pay, up from 285 times the year before. That widening ratio is the highest recorded since the AFL-CIO began tracking it in the 1990s.
At major low-wage employers specifically, a separate analysis found CEO pay rose 41% between 2019 and 2025, while median worker pay at those same companies rose 21% — short of the 26% rise in prices over that stretch.
What economists across the spectrum are saying about it
This concern isn't limited to labor advocates. MIT economist Daron Acemoglu has warned that continuing down a path of deepening inequality and job losses threatens the stability on which the broader economy — and democracy itself — depends. KPMG chief economist Diane Swonk has called the chart showing this trend one that "still haunts" her, and her colleagues refer to it as the "revolution chart." She's described the widening divide as reflecting a decades-long erosion of trust in the economy, warning of an "undercurrent of betrayal."
What Minnesota does with the tools available at the state level
State governments can't set federal tax policy or executive pay rules. They can set floors for what workers are guaranteed, and Minnesota has moved on several of those in the past two years, regardless of what's happening nationally with corporate profits.
Minnesota's minimum wage now adjusts for inflation automatically, rising to $11.41 an hour as of January 2026, a provision Rep. Ryan Winkler (DFL-Golden Valley) authored as chief sponsor of the state's 2014 minimum wage law.
Earned Sick and Safe Time, in effect since 2024, was carried by Rep. Liz Olson (DFL-Duluth) in the House and Sen. Sandy Pappas (DFL-St. Paul) in the Senate, and guarantees paid leave for illness, caregiving, and safety needs.
Minnesota Paid Leave, which took effect this year and was authored by then-Rep. Ruth Richardson with Sen. Alice Mann carrying the bill in the Senate, provides up to 20 combined weeks of job-protected leave for medical and family needs. Lt. Gov. Peggy Flanagan was an early champion of the effort — she co-founded the Minnesotans for Paid Family and Medical Leave coalition as an advocate years before joining the legislature, then continued pushing for it as a state representative until it finally passed in 2023.
The state's Wage Theft Prevention Act, sponsored jointly by Rep. Tim Mahoney (DFL-St. Paul) and Sen. Eric Pratt (R-Prior Lake), just delivered its largest enforcement action to date: a $1.28 million settlement for 26 construction workers in April 2026, recovering wages that were never paid in the first place.
Minnesota’s change to Social Security benefit taxes
Sen. Aric Putnam (DFL-St. Cloud) led the push to cut Minnesota's tax on Social Security benefits, introducing a bill in 2023 to eliminate the tax entirely.
That full repeal didn't pass due to cost concerns raised by the Minnesota Department of Revenue, which estimated the full repeal would cost the state $600 million to $1.26 billion depending on the budget period measured.
A more limited version was folded into that year's broader tax package. The expanded subtraction is capped by income, so the benefit is weighted toward lower- and middle-income retirees rather than the highest earners. It now cuts the number of Minnesotans paying state tax on Social Security roughly in half.
How the November midterm elections will impact workers
Who holds those offices after November has a direct effect on how far a Minnesota paycheck goes.
City government: who actually benefits from a corporate tax break
Cities and counties across Minnesota use roughly 1,700 tax increment financing districts, diverting about $250 million in property tax revenue each year to subsidize private development, plus additional grants and abatements aimed at attracting or retaining companies. These deals are pitched as job creators for the community.
But Minnesota has also pulled back from the subsidy disclosure standards it once led the nation on, and it no longer publishes who receives many of its sales tax exemptions and credits — making it harder for residents to know whether a given tax break produced the jobs or investment it promised, or simply moved a company from one Minnesota suburb to another. Local elections decide who sits on the councils and development authorities approving these deals, and how much accountability comes attached to them.
State government: the protections already covered in this post
This is the level where Minnesota's minimum wage indexing, Earned Sick and Safe Time, Minnesota Paid Leave, wage theft enforcement, and the Social Security tax subtraction all originate. Every one of these is a state legislative decision that directly affects what a Minnesota paycheck includes. State legislative races determine whether protections like these remain, expand, or get rolled back.
Federal government: who enforces the rules on corporations
At the federal level, enforcement of the rules that keep corporate conduct in check has changed sharply since 2025. The Department of Justice paused enforcement of the Foreign Corrupt Practices Act for several months, closing nearly half of its pending investigations before the pause lifted, and scaled back enforcement of the Foreign Agents Registration Act.
Separately, federal agencies dropped or paused more than 165 corporate investigations in 2025, including roughly 40 into companies owned by a senior administration official, and the SEC closed its case against a major cryptocurrency exchange shortly after that exchange's founder had backed Trump-aligned political investments.
The Treasury Department also ended a rule requiring U.S. companies to disclose their beneficial owners to federal regulators, reversing a post-2021 anti-corruption safeguard.
Voting has consequences – in Minnesota we’re reaping the benefits of a legislature that works for the people. Nationally, we’re struggling under an administration that works for Corporate interest.
