Extraction
How much of the economy flows from labor to capital: wage share, corporate profits, household debt burden.
A score of 0 means economic output is evenly split between labor and capital. 100 means wealth is heavily captured by corporations and asset owners at the expense of wages and households. Wage share of gross domestic income collapsed from around 55% in 1970 to 42.7% today. That single shift is the biggest contributor. Corporate profits near all-time highs and household debt servicing push the score up. Rising real wages would push it down.
The great decoupling
For the first 25 years after World War II, workers' pay rose with productivity. If the economy produced more per hour, workers got more per hour. That link broke in the early 1970s. Productivity kept climbing. Real wages flatlined. The gap is where extraction shows up most clearly.
Productivity (real output per hour)
FRED OPHNFB, nonfarm business. Indexed. Kept rising through every decade.
Real hourly wages (production workers)
FRED AHETPI deflated. Indexed on same scale. Peaked around 1973.
Wage share of Gross Domestic Income
FRED W270RE1A156NBEA. % of national income paid as wages. Peaked near 55% in the early 1970s.
Corporate profits as % of GDP
BEA NIPA. The inverse of the wage share story. Capital's take keeps rising.
The productivity-wage gap, personalized
From 1948 to 1973, worker productivity and real wages rose together. After 1973, productivity kept climbing while wages flatlined. The difference went to capital. Enter your salary to see what you'd earn if wages had kept pace.
That's $49K more than you earn now, every year. Roughly $4K a month or $23.44 an hour.
The math: productivity index 1973→present grew 2.61×, real wages 1973→present grew 1.44×. The ratio (1.81×) is the counterfactual wage multiplier. Real wages use production worker hourly compensation adjusted for CPI. Individual situations vary.
Sources: EPI productivity-pay gap · FRED OPHNFB productivity · FRED real wages.
CEO-to-worker pay ratio
In 1965, top CEOs earned about 20× the typical worker. Today it's roughly 344×. Scrub the timeline to see the shift.
the typical worker. At today's median worker pay of $58K, that CEO takes home about $20.0M a year.
CEO pay covers the top 350 US firms (EPI methodology), including realized stock awards. The mechanism is mostly equity: since the Clinton-era deductibility cap pushed compensation from cash to options, buybacks have concentrated the equity value that CEOs then cash out of.
Source: EPI CEO compensation series · median worker pay from BLS weekly earnings.
The mechanics of extraction
If wage share is the outcome, these are the mechanisms. CEO pay decoupled from worker pay. Stock buybacks took the place of wage raises. The real minimum wage eroded to a fraction of its 1968 peak without ever being explicitly cut. Each curve tells a chapter of how the post-1980 economy was built.
CEO-to-worker pay ratio
EPI, top 350 US firms. In 1965 a CEO earned 20× a typical worker. Today it's 290×.
S&P 500 stock buybacks ($B/year)
SEC Rule 10b-18 (1982) legalized buybacks. Money that once went to wages and capex now goes to boosting share prices.
Federal minimum wage, in 2024 dollars
The nominal minimum was raised 5 times between 1968 and 2009 but never kept pace with inflation. At $7.25 it's half its 1968 real value.
PE as extraction, in practice
Private equity has been the industrial engine of extraction over the past two decades. The playbook: buy the business with debt, pay yourself the dividend, cut staff and service, sell or bankrupt the shell. These aren't exceptions. They're studied patterns.
DSOs and child procedures
Dental Service Organizations backed by PE firms now control 30%+ of US dental practices. Studies have linked ownership to increased root canal and crown procedures on children covered by Medicaid. The incentive is higher per-visit billing.
Mortality and staffing
A 2021 NBER study found PE ownership of nursing homes increases short-term mortality by about 10%. PE-owned homes also cut nurse staffing hours and increase Medicare billing. The business model values per-resident margin over outcomes.
Vet clinic roll-ups
Mars Inc., JAB, and National Veterinary Associates (PE-owned) have quietly rolled up independent vet practices. Pet care inflation has run 2-3× general CPI for a decade. Owners don't realize the clinic is owned by a holding company until the prices change.
Toys R Us, Sears, Red Lobster
Classic leveraged-buyout endings: PE loads the company with acquisition debt, collects dividends from asset sales (often real estate), then the company goes bankrupt. Employees lose pensions and jobs. The PE firm keeps the dividends.
Plumbing, HVAC, electrical roll-ups
PE firms have spent the last decade rolling up local plumbing and HVAC companies behind brands the customer never sees change hands. Technicians are pushed onto commission structures that reward upsells over repairs. Service calls that once ran $200 now routinely quote $800+ for the same fix. The local-feeling truck still shows up; the pricing has been set by a private-equity operating playbook.
Alden Global Capital
Alden has bought chains including the Chicago Tribune, Denver Post, and about 200 other local papers, then cut newsroom staff by 50-70% within a few years. Reporters, beat editors, and photographers are let go; what remains is often wire content with local ads. Civic accountability journalism shrinks with the newsroom. The real estate under the buildings, meanwhile, gets sold off to investor partnerships.
Antitrust: from Standard Oil to Google
Wage share and extraction sit downstream of market structure. When a small number of firms dominate a market, they capture more of the surplus and their workers and suppliers get less. The US had a 90-year run of aggressive antitrust enforcement from Sherman (1890) through the AT&T breakup (1982). It ended with one paragraph of rewritten merger guidelines in the Reagan era. Almost every Big Tech acquisition since has been waved through.
Sherman Antitrust Act
First federal law targeting monopolies and cartels. Criminalizes combinations in restraint of trade and monopolization.
Standard Oil broken up
Supreme Court orders Rockefeller's Standard Oil split into 34 separate companies. Precedent for structural remedies.
Clayton Act + FTC Act
Clayton Act bans anticompetitive mergers; FTC Act creates the Federal Trade Commission as a permanent antitrust enforcer.
Alcoa aluminum ruling
Judge Learned Hand: even a "natural" monopoly with reasonable prices violates the Sherman Act if it uses size to deter competition.
AT&T consent decree
Bell restricted to regulated telephone business, barred from entering computing. Arguably kept IBM alive and let the computer industry flourish.
US v. IBM filed
DOJ sues IBM for monopolizing the mainframe market. Case runs 13 years, shapes IBM's behavior during the birth of personal computing.
US v. AT&T filed
DOJ challenges AT&T's telephone monopoly. Ford and Carter administrations push it forward.
AT&T broken up
Consent decree splits AT&T into seven regional Bell operating companies. The most consequential US antitrust remedy in decades.
IBM case dropped, merger guidelines loosened
Reagan's DOJ (William Baxter) drops the IBM case "without merit" and rewrites merger guidelines around the Chicago School consumer-welfare standard. The era of active trust-busting ends.
US v. Microsoft
DOJ + 20 states sue Microsoft over browser bundling. A trial court orders breakup in 2000; an appeals court reverses it.
Microsoft settles softly
Bush administration settles with behavioral remedies (no breakup, no monetary penalty). Signals that even blatant monopolization no longer warrants structural relief.
Google acquires DoubleClick
FTC approves 4-1. Combines Google search with the dominant display-ad platform. No divestiture. Foundation of Google's $300B/yr ad business.
Facebook buys Instagram
FTC approves in 30 days. One of the most lopsided deals in tech history (~$1B for what became $500B+ of Meta revenue).
Facebook buys WhatsApp
Approved for $19B. Combined with Instagram, Meta controls three of the four most-used messaging / social apps in the world.
FTC finally sues Meta
Case demands divestiture of Instagram and WhatsApp, eight years after the fact. Meta argues prior approval insulates the deals.
DOJ sues Google (search)
First major monopolization case against a tech giant in two decades. Focuses on default-search agreements with Apple and Android OEMs.
Google ruled a monopolist (search)
Judge Mehta: Google is a monopolist and has acted to maintain its monopoly. Remedy phase in 2025 considers divestiture of Chrome and restrictions on default agreements.
Google ad-tech ruling
Separate case finds Google monopolized ad server and ad exchange markets. Limited structural remedies proposed.
Apple, Amazon, NVIDIA cases pending
DOJ (Apple, iPhone ecosystem) and FTC (Amazon, merchant practices) cases proceeding. NVIDIA under informal inquiry over AI-chip bundling.
The 1982 inflection wasn't a Supreme Court ruling or a law. It was a change in prosecutorial philosophy. Under Robert Bork's "consumer welfare" standard (Reagan-era), the only valid antitrust harm became short-term consumer prices. Labor monopsony, supplier squeezes, and long-run innovation effects stopped counting. That framework held through Democratic and Republican administrations alike for four decades.
The 2020s cases against Google, Meta, Apple, and Amazon are the first serious attempt to widen the lens. Whether they end in divestiture or behavioral patches will set the terms for the next thirty years of market concentration.
The concentration tax
Four decades of loose antitrust left Americans paying more than peer countries for the same services. This isn't theoretical. Fill in what you actually pay and the calculator compares to OECD median pricing for the same category.
Over 30 years that's $193.5K in cash. Invested at 7% real return instead, it would compound to $609.3K.
What this measures. The gap between US consumer prices and peer-country prices for the same categories. Some of the gap is quality (US healthcare pays providers more), but most of it is rents: broadband and mobile markets are textbook duopolies/triopolies; pharma has patent and negotiation asymmetries no other OECD country accepts. The sum is roughly what four decades of lax antitrust enforcement has cost the median household.
How to protect yourself
You can't reverse a macro trend on your own, but you can change which side of it you're on. If corporations are capturing the economy's surplus, own the corporations. Low-cost index funds let wage earners participate in the returns that have historically driven inequality, instead of only absorbing the cost.
Compound-returns calculator & starter playbookHow to fight back
Personal finance protects you from extraction. Collective action changes the rules that enable it. The post-war wage share didn't peak because workers individually negotiated hard. It peaked because of specific policy choices (strong unions, enforced antitrust, progressive taxes) that were later reversed. Policy pushed the ratio down; policy can push it back.
Workplace
- Join an existing union or organize one. Unionized workers earn 10-20% more than comparable non-union workers.
- Know your rights. The NLRB protects concerted activity even at non-union workplaces.
- Talk about pay with coworkers. Pay secrecy is a tool of wage compression; most states protect pay-discussion rights.
- Negotiate at hiring and at every review. Employers count on people who don't ask.
Politics
- State and local elections decide labor law, minimum wage, tenant protections, corporate subsidies. Turnout in these is often under 20%.
- Vote for candidates and ballot measures on antitrust, minimum wage indexation, and non-compete bans.
- Call your reps about specific bills (PRO Act, stock buyback regulation, tax code changes). Staffers count calls.
- Support primary challengers to both parties when incumbents vote against worker interests.
Where you spend
- Shop at employee-owned stores, worker co-ops, and local businesses where margins stay in the community.
- Avoid brands that use aggressive PE extraction playbooks (search "PE owned" before buying).
- Pay workers directly when possible. A $20 tip to a server is not the same as a $20 service fee kept by the platform.
Policy priorities
- Index the federal minimum wage to CPI so it doesn't erode passively.
- Treat stock buybacks above a threshold as distributions taxed like dividends.
- Strengthen merger review for roll-ups and PE acquisitions in healthcare, housing, and critical services.
- Close the carried-interest loophole. PE partners should pay ordinary income rates on management fees.
Stay informed
- Subscribe to a journalism outlet that covers labor and antitrust (Labor Notes, Matt Stoller's BIG, ProPublica).
- Read the EPI State of Working America annually. The charts are the facts of the debate.
- Follow your state attorney general's consumer-protection and antitrust case filings.
Community
- Attend local government meetings. City councils decide zoning, living-wage ordinances, and tax breaks for big employers.
- Support organizations doing this work in your area: worker centers, tenant unions, legal aid clinics.
- Mutual aid networks pick up where extracted social services fail: childcare co-ops, food networks, skill sharing.
The numbers show a 50-year trend that didn't happen by accident. Declining union density, erosion of the minimum wage, the buyback boom, and PE consolidation were all enabled by specific policy choices. Those choices could be reversed.
History moves when enough people stop treating structural outcomes as natural.
What moves the score
Historical context
In the post-war decades (1945-1973), productivity gains roughly tracked wage gains. A worker producing more got paid more. After 1973, those lines split. Productivity kept rising while wages flatlined, and the difference went to capital as corporate profits, stock buybacks, and executive compensation. The mechanisms are multiple. Union membership collapsed from about 35% in 1954 to about 10% today. The minimum wage fell roughly 30% in real terms since 1968. Antitrust enforcement stopped in the 1980s, enabling the concentration of employers and the squeeze of supplier margins. Stock-based compensation aligned executives with shareholders rather than workers. Household debt took up the slack. Instead of raising wages, the economy extended credit. Debt service as a share of disposable income peaked near 13% in 2007, crashed the housing market, and is currently 11.3%. The wage share of national income sits at 42.7% today vs around 55% in 1970. That is the clearest measurement of the structural shift in who captures economic surplus. Business cycles come and go. This trend has run for 50 years.
Component breakdown
% of national income paid as wages. Peaked near 55% around 1970. Decline = wealth flowing from workers to owners.
% of disposable income going to debt payments. Higher = more of paycheck extracted by creditors.
Nominal hourly wage for production workers. Weak signal since wages always rise nominally; better to track real wage YoY.
Quarterly corporate profits in $B, adjusted for inventory and capital consumption. Near all-time highs = capital winning.
| Component | Value | Score | Weight |
|---|---|---|---|
Wage share of Gross Domestic Income labor % of national income paid as wages. Peaked near 55% around 1970. Decline = wealth flowing from workers to owners. | 42.7 | 82 | 35% |
Household debt service ratio households % of disposable income going to debt payments. Higher = more of paycheck extracted by creditors. | 11.3 | 52 | 20% |
Avg hourly earnings (production) labor Nominal hourly wage for production workers. Weak signal since wages always rise nominally; better to track real wage YoY. | 32.1 | 53 | 15% |
Corporate profits (IVA & CCAdj) capital Quarterly corporate profits in $B, adjusted for inventory and capital consumption. Near all-time highs = capital winning. | 3912 | 83 | 30% |