Indicators · Jobs and pay
Labour's share of business output
Triggered since 25 Sep 2026 Direct evidence
93.7 in Q3 2026 (2017 = 100), the lowest since the series began in 1947. It is down 1.5 points on a year earlier. Over the same year pay per hour rose 4.5%, output per hour rose 2.1% and the prices of business output rose 4.1%. The share changes by roughly the change in pay per hour less the changes in output per hour and in prices.
The change over four quarters is lower than 79% of the readings since 1990.
US recessions Periods when this signal was on
What it measures
The share of US business output paid to workers as wages and benefits (nonfarm business sector, index 2017 = 100).
Why it matters
It is the most direct measure of whether output keeps growing while a smaller part of it is paid to workers, the change the argument is about.
When it triggers
Triggers when the index is half a point or more below its previous low and has fallen 2 points or more over four quarters.
Where it fits
Output growing faster than pay. The argument predicts: Labour's share of output falls by about two points a year or more, and productivity grows faster than real pay, with no recession and no jump in the prices businesses charge.
Other possible causes. Recoveries from recession and jumps in the prices businesses charge also lower the share for a while (2009, 2022).
The prediction
Open Set 8 Oct 2026
- If we are wrong94.35 or above
- Now93.73Q3 2026
- What prompted the view93.45Q2 2026
- If we are right91.45 or belowby Q2 2027
Its rule had already triggered when our view was formed, on the Q2 2026 reading of 93.45: that reading prompted the view and is not evidence for it. If our view is right, labour's share of US business output reaches 91.45 or below by Q2 2027. The date is a year after the start, at the two points a year the argument states. Reaching it counts as evidence only if no US recession signal was on during the period it measures, or in the three months after, and the prices US businesses charge were not rising faster than in 95% of quarters from 1990 to 2019.
If it is at 94.35 or above on two consecutive readings, that counts against our view. That level is the start, 93.45, raised by 0.90, the median size of its change over four quarters (the span its rule measures) from 1990 to 2019. The deadline refers to the period the data cover. If it passes without a reading of 91.45 or below, that counts somewhat against our view.
When the rule was set
The rule was set on 25 Sep 2026, when it was already triggered. Its threshold is chosen by the author. When the rule was set, the share's fall in 2026 came mostly from a jump in the prices US businesses charge.
How often it has been on
Applied to past data at the end of each month from Jan 1990, using only what had been published by then, it was on in 2% of months to 2019 and 7% since 2020. More than six months from any US recession as dated by the National Bureau of Economic Research, it triggered once, in Feb 2023. The rule was set with these years in view, so these figures cannot show how well it predicts.
Past triggers
On the data published at the time, it triggered in May 2009 and Feb 2023.