Capital has beat labor over the last quarter century in NYC, report finds

Workers’ share of the New York City economy has decreased in the last 25 years while capital-owners' share in the city grown to a higher point than the country as a whole, an economist in The New School found.

In a report released last month, Mohamed Obaidy, the associate director of The New School’s Center for New York City Affairs, found that business owners have benefitted more than workers from the increase in worker productivity over the last quarter-century and that by 2024 capital was reaping a higher percentage of the New York City economy than it was in New York State or in the country as a whole. 

“Over the last two decades, labor’s share of economic output declined, while the capital share increased,” reads the report, titled Labor, Capital, and Inequality in New York: A Functional Income Approach. “This pattern is visible nationally, but it is more pronounced in New York State. A smaller share of economic output is being paid out in the form of wages, salaries, and benefits, while a larger share is accruing to capital income, or profit.” 

In total, workers’ share of economic output – measured by worker compensation of wages and benefits – declined from just under 56 percent in 2001 to just over 49 percent in 2024. Over the same period, capital’s share, – measured by gross operating surplus that combines profit and other factors – increased from just under 40 percent to 46 percent.  

Workers’ share of economic output – measured by worker compensation of wages and benefits – declined from just under 56 percent in 2001 to just over 49 percent in 2024, a new report found. Over the same period, capital’s share, – measured by gross operating surplus that combines profit and other factors – increased from just under 40 percent to 46 percent.  

Labor, Capital, and Inequality in New York: A Functional Income Approach

Effects concentrated in city, specific industries

The changes in the city reflected the same trends happening in New York State and the entirety of the United States which, Obaidy argued, are the results of globalization, declining union density and policy decisions that have empowered business owners at the expense of workers. But the city’s status as a headquarters for numerous finance and technology companies and the legacy of the austerity born out of the 1970's fiscal crisis has resulted in a disproportionate negative effect on labor.

That's despite the city’s proportionately high union density and its strong record on labor rights relative to the rest of the country.  

"New York is becoming wealthier and workers are becoming more productive but where is that wealth going? Who is capturing the benefits of that increased productivity?” Obaidy questioned. “New Yorkers are contributing more to New York City’s economic gains, but their pay isn’t going up proportionately. More of that money is going to capital owners.” 

About 20.5 percent of workers living in the five boroughs were union members in a period from 2025 to 2026 measured in CUNY’s State of Union’s 2026 report, more than twice the national rate of 10 percent. Workers both nationally and in New York gained some of their share of the economy back in brief periods following the 2008 financial crash and the Covid-19 pandemic, but Obaidy’s study shows those were blips that briefly pushed against the larger trend of the last 25 years.  

Labor’s decreasing power is most pronounced in transportation and warehousing, a field that has come to be dominated by Amazon and its army of independent contractors in the last two decades. Those independent contractors, also known as Delivery Service Providers, make it easier to fire workers’ en-masse when they decide to unionize and ultimately reduce worker’s bargaining power, resulting in lower wages and benefits.  

The International Brotherhood of Teamsters, a union attempting to unionize workers at Amazon across the country, has backed the Delivery Protection Act, a City Council bill that would eliminate Amazon’s contractor model and force the company to employ its delivery drivers directly. That would likely remove impediments to organizing and could allow workers to unionize and win better wages. 

Policy changes that increase the minimum wage, increase the tax burden on capital or boost worker safety nets can help reverse the trend of labor’s decreasing power, the report found.  

Labor, Capital, and Inequality in New York: A Functional Income Approach

'Anything that allows workers to be in a better bargaining position'

“Anything that allows workers to be in a better bargaining position,” Obaidy said. 

Other industries in the city where labor power has most decreased include arts, entertainment and recreation, finance and insurance, manufacturing, construction, retail, trade and information businesses. Some areas that have bucked the trend include educational services and professional scientific and technical services, two areas with high unionization rates.  

But Obaidy warns that the public sector – a well of stable, unionized jobs with healthcare and pension benefits – has not been exempt from labor’s decline of economy share. Changes in the public sector that limit worker power can have a broad effect across the economy.

"When the City pays contracted services at levels that do not fully reflect labor costs, fiscal restraint can be transmitted from the city budget to the wages of workers in the private sector providing publicly funded services," the report reads. "When the public sector is constrained by austerity, it can weaken the broader wage floor, normalize fiscal arguments against labor demands, and reinforce the idea that worker compensation must be subordinated to bond-market confidence and budget balance."