The U.S. economy is expanding, but workers are capturing less of that growth than ever before. New data shows labor's share of economic output has fallen to historic lows, meaning employers are keeping a larger slice of profits while wages fail to keep pace with productivity gains.

This disconnect matters for your paycheck. When workers earned a bigger piece of economic growth in the 1970s and 1980s, wage increases typically matched or exceeded inflation. Today, even as companies report strong earnings and stock markets hit records, real wages for most workers stagnate or decline when adjusted for inflation.

The pattern reveals itself in household finances. Workers contribute more output per hour than decades ago, yet their share of corporate revenue shrinks. Companies invest more in automation and capital improvements, which boost stock values and executive compensation. Workers see minimal raises. For someone earning $60,000 annually, this means their purchasing power erodes even during periods labeled as economic growth.

Savers and investors face different pressures. If you own stock index funds, you benefit from corporate profit margins that squeeze labor. Your 401(k) performance partially depends on companies minimizing wage expense. But if you depend on your salary, this trend works against you. Retirement savings built on modest wage growth and high inflation create a precarious situation.

The disparity has widened since the 2008 financial crisis. Recovery concentrated wealth among asset owners while wage growth remained subdued. Workers who depend on employment income without substantial investments experience slower wealth accumulation than previous generations at the same age.

For household budgeting, this means planning for smaller raises than historical norms. If inflation runs 3 percent annually but your employer offers 2 percent increases, you lose ground annually. Building an emergency fund becomes more critical when wage growth cannot be relied upon as a wealth-building tool.

This economic structure benefits capital owners and penalizes wage earners