Workers Got More Productive. Paychecks Didn't Keep Up

Workers Got More Productive over the past six years — and corporate America has the spreadsheets to prove it. U.S. revenue per worker has grown at roughly twice the pace of the 2010s since 2019, according to new analysis from research economist Jeremy Pearce at the Federal Reserve Bank of New York, published this month in Liberty Street Economics. Yet the gains have mostly shown up in fatter profit margins, not in fatter paychecks.

The numbers tell a story of acceleration. Growth in nonfarm-business labor productivity, which limped along near one percent a year through the 2010s, doubled to 2.2 percent annually from 2019 through 2025. For public companies, the shift was even sharper: real revenue per worker, which crept upward at 0.7 percent a year during the 2010s, expanded at a near-identical pace over the same recent stretch. Something changed after the pandemic, and it was not just a statistical blip.

That something, the research suggests, is the return on brains over buildings. Firms that were already spending heavily on research and development in 2019 saw their operating margins grow faster in the years that followed; a company with ten percent more R&D spending relative to sales saw about seven-tenths of a point more operating-markup growth through 2025. Capital intensity — the old story of more machines and factories — showed no such pattern. The post-pandemic productivity boom belongs to firms that invested in technology and intangible assets, and the rewards stuck to their balance sheets.

Where the money went

Operating margins across the economy rose at more than two percent a year from 2019 to 2025, the analysis finds, meaning a meaningful share of the productivity surge landed as profit rather than wages. The study is built on corporate 10-K filings and leaves out sectors like agriculture, utilities, finance, real estate, and public administration, where measuring output per worker gets murky — but across the firms it does cover, the pattern is consistent: workers generated more value, and companies kept more of it.

Independent tallies point the same way. One economist's reconstruction of the data notes that the U.S. labor share of income — wages' slice of the economic pie — broke below a six-decade band this spring, falling to 72.0 percent in the second quarter after holding between roughly 76 and 81 percent from the early 1960s through 2019. Over the same span, the profit share climbed from 12.4 percent at the end of 2019 to 18.8 percent. Corporate profits after tax are up 76 percent since late 2019, while the overall economy grew 48 percent. The pie got bigger, and workers' slice got smaller.

The squeeze shows up on the ground too. The Federal Reserve's latest Beige Book, compiled from business contacts through early October, found robust price growth in three of twelve districts, up from just one a month earlier, alongside growing wage pressure and steady employment. For gig workers, that pressure has already curdled into a costlier, less flexible market.

What this means for your paycheck

Workers Got More Productive, but the pay data has not caught up — and that gap is the whole story. If your output per hour roughly doubled its growth rate while your compensation tracked something closer to inflation, the difference did not evaporate. It went to shareholders, to retained earnings, and to the next round of technology investment. This is the productivity-pay gap as a lived experience: busier, more efficient, and not proportionally better paid.

There is a real debate underneath, and the New York Fed research is honest about it. The analysis leaves open whether rising margins are fair returns on the heavy investments firms made in intangibles — the R&D, software, and systems that drove the productivity boom — or simply a windfall that workers never saw. The central bank's own disclaimer applies: these are the author's views, not the Federal Reserve's. But whichever explanation you prefer, the arithmetic is the same for the person clocking in: the value you create rose faster than the pay you take home.

For young workers, the stakes are concrete. Wage negotiations, job hopping, and benefit choices are where the abstract gap becomes personal money, and Gen Z and millennials are already saving harder ahead of a tight budget season. Knowing the economy-wide numbers — that margins, not wages, absorbed the productivity surge — is leverage: it reframes a raise request from a favor into a claim on value you demonstrably helped create.

Workers Got More Productive, and the next question is who gets paid for it. The pandemic-era productivity boom is real, measurable, and still running. Whether the gains finally flow to paychecks will be decided in bargaining rooms, boardrooms, and policy debates — not in the spreadsheets, which have already spoken.

Sources: Liberty Street Economics, Federal Reserve Bank of New York, the mid-October analysis; The Market Monetarist, on the labor and profit share data; SourceFirst News, summarizing the October Beige Book.