Labor’s Share Hits Record Low as RI Costs Mount
Federal data shows the labor share of business output reached a record-low 52.8% in the second quarter. While Rhode Island wage growth matched productivity gains, weekly pay trails national levels as housing costs bite.
Rhode Island workers average $167 less per week than the national average, leaving nearly half of local renters cost-burdened as rents have surged over 30%.
Pull out your pay stub and sit down at the kitchen table.
Add up the hours: forty on the clock, maybe a five-hour Saturday shift at time-and-a-half. You ran the machine, delivered the goods, stocked the shelves, or handled the calls. Across the country, the total wealth generated by businesses keeps marching upward. Yet the portion of that revenue handed back to the people doing the work just hit the smallest slice on record.
According to revised data released on September 3 by the U.S. Bureau of Labor Statistics, the labor share of nonfarm business output dropped to 52.8% in the second quarter of this year. The agency first began tracking that metric in the first quarter of 1947. In nearly eighty years of keeping score, it has never sat lower.
Popular Information highlighted the record today, connecting the national slump to worker compensation and the widening divide between corporate output and household income.
To understand what that 52.8% figure actually tells us, you have to look at the ledger. This is not simply a count of gross pay envelopes. In the BLS formula, labor share accounts for total compensation. That covers wages and salaries, but it also folds in employer payments for healthcare, pension contributions, social insurance, and estimated earnings for self-employed individuals.
The other half of the ratio is nonfarm business output—a slice of commerce that accounted for roughly 76% of nominal gross domestic product in 2025. It leaves out general government and farm operations.
The metric does not mean workers take home barely half of gross domestic product. What it shows is an aggregate balance sheet of the private business sector: how much of the gross income produced by nonfarm enterprises goes to worker compensation, and how much is absorbed by capital depreciation, debt service, overhead, and operating profits.
During the second quarter of this year, nonfarm business productivity rose at an annualized rate of 1.4%, with output growing 1.7% while hours worked edged up 0.3%. Employers paid out 2.6% more in nominal hourly compensation. But once you factor in consumer prices at the grocery store and the gas pump, real hourly compensation dropped by 3.3% at an annualized pace. Over the four quarters ending in mid-2026, real compensation slipped 0.1%.
Workers produced more per hour, but the real buying power of an hour’s labor went backward.
Take that national balance sheet and look at how it plays out across Rhode Island.
On Friday, the BLS released its first-quarter wage figures from the Quarterly Census of Employment and Wages. The report shows Rhode Island’s average weekly wage reached $1,487 in the first three months of this year.
Compare that to the country as a whole. Nationally, the average weekly wage was $1,654.
That leaves the average Rhode Island worker trailing the national mark by $167 every single week. Over the course of fifty-two weeks, that gap adds up to $8,684 missing from an Ocean State household budget.
Rhode Island ranked 22nd among all fifty states and Washington, D.C. for wage levels. Statewide average weekly pay did rise 4.2% compared to the first quarter of 2025, a growth rate that ranked 14th nationally. But overall employment in the state contracted by 0.6% over the same stretch, landing at 486,900 jobs.
Break those earnings down by county, and the local disparities stand out. Newport County led the state with an average weekly wage of $1,529. Providence County followed at $1,513, up 4.0% year over year. From there, the weekly paycheck drops off fast. Kent County workers averaged $1,319, showing weak 2.7% annual growth. Washington County averaged $1,303. Bristol County sat at the bottom of the state ladder at $1,242 a week—trailing the national weekly average by more than $400.
State labor records show a similar threshold. The Rhode Island Department of Labor and Training reported in its 2025 summary that average annual earnings across all sectors came out to $71,146. For workers employed strictly in the private sector, that figure dropped to $69,365.
It is tempting to look at a plunging national labor share and conclude that Rhode Island employers are systematically shortchanging workers on the gains of their productivity. But looking at state-level data complicates that assumption.
On May 28, the BLS published its state productivity tables for 2025. In Rhode Island’s private nonfarm sector, labor productivity rose 1.1% for the year, while output grew 1.5% and total hours worked edged up 0.5%. Over that same year, hourly compensation across the state climbed 4.5%, with unit labor costs rising 3.4%.
Widen the lens to the long-term trend between 2007 and 2025, and the state numbers show a steady pattern. Over that eighteen-year stretch, Rhode Island hourly compensation increased at an annual average rate of 3.0%, while labor productivity grew at an annual rate of 1.0%.
The state data does not show compensation growth lagging productivity gains. In Rhode Island, hourly compensation growth has actually outpaced labor productivity growth over the long haul.
The tension facing Rhode Island workers is not that their raises failed to match local productivity gains. The pressure comes from the baseline wage, the kinds of jobs that sustain the local economy, and what happens to a paycheck when living expenses hit the counter.
Consider the occupation mix. In the Providence-Warwick metropolitan area, the BLS reported a mean hourly wage of $33.31 in May 2025, released on June 15, sitting slightly behind the national occupational mean of $33.54.
A large share of Rhode Island’s workforce clocks in every day at service-sector jobs that pay far below those averages. In Providence-Warwick, food preparation and serving jobs averaged $19.08 an hour. Office and administrative support positions averaged $25.95 an hour. Retail and sales roles averaged $26.52 an hour.
For someone taking home $19 or $25 an hour, discussions about national aggregate labor shares feel abstract. What feels immediate is the cost of staying afloat.
On August 12, the BLS reported that consumer prices across the Northeast region were up 4.1% over the prior twelve months, with the regional housing index also climbing 4.1%. Statewide wage growth of 4.2% did little more than match that pace.
Matching regional inflation does not heal the damage done by several consecutive years of runaway shelter costs.
The 2025 Integrated Housing Report published by the Rhode Island Executive Office of Housing documents an extraordinary surge in housing expenses. Between 2020 and 2024, median gross rents across the state climbed by more than 30%. During that same four-year window, median home values for owner-occupied residences jumped 46.1%.
Wages did not grow 30%, let alone 46%.
The result is a severe affordability crunch. The state housing report found that 48.0% of all renter households in Rhode Island are housing cost-burdened, meaning they must spend more than 30% of their total income just to maintain a roof over their heads. Among homeowners, 26.7% face that same cost burden.
Economists offer differing explanations for why the labor share has fallen so steadily across the country. In a July 2022 study published by the American Economic Association, researchers pointed to automation as a leading driver in their economic models, alongside rising markups that allow firms to capture more value from final sales. Other researchers point to shifts in global supply chains, corporate consolidation, and the steady loss of union bargaining leverage. The BLS itself documents the figures without identifying a single cause.
Regardless of which macroeconomic force carries the most weight, the ground-level reality in Rhode Island is straightforward. Ocean State workers are putting in the hours, keeping pace with productivity, and securing moderate percentage gains on their contracts and hourly rates.
Yet with average pay falling $167 short of the national weekly mark, and half the state’s renters handing over a third of their earnings just to keep their apartments, those gains disappear into basic survival.
When private industry sends less than fifty-three cents of every dollar of output back to compensation, workers everywhere feel the pinch. In Rhode Island, where housing costs have outrun the wage scale for years, that arithmetic leaves families with very little room to breathe.
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