A growing divergence between corporate profits and worker wages, coupled with slowing productivity gains, is prompting scrutiny of capitalism’s foundational mechanisms. Despite record-high corporate earnings, real median household income has risen by less than 1% annually over the past decade.
- S&P 500 net income grew 127% from 2014 to 2024, while median household income rose only 9.6%.
- Top 1% of earners captured 60% of income growth since 2000.
- U.S. productivity growth averaged 1.2% annually since 2000, down from 2.4% in prior decades.
- R&D spending as a share of GDP has remained flat at 3.4% since 2000.
- Equity risk premium rose to 6.1% in late 2024, indicating higher investor risk aversion.
- 58% of Americans believe the economic system is rigged, per Pew Research Center 2024 survey.
Recent economic data reveals a deepening disconnect between corporate performance and broad-based prosperity. In the United States, S&P 500 companies posted cumulative net income growth of 127% between 2014 and 2024, while the median household income increased by just 9.6% over the same period, adjusted for inflation. This disparity underscores a shift in wealth distribution, with the top 1% capturing 60% of all income growth since 2000, according to data from the Congressional Budget Office. Productivity gains in the U.S. have averaged 1.2% annually since 2000, down from 2.4% in the 1950s–1970s, raising questions about long-term economic sustainability. At the same time, corporate investment in research and development has stagnated, with R&D spending as a share of GDP plateauing at 3.4%—a level not significantly higher than the 1980s. These trends have eroded public trust: 58% of Americans now believe the economic system is rigged, according to a 2024 Pew Research Center survey. Investors are also reassessing risk, with the equity risk premium—historically a measure of compensation for stock market volatility—rising to 6.1% in late 2024, up from 4.3% in 2019, signaling heightened concern about long-term returns. The implications are far-reaching. Pension funds, sovereign wealth funds, and large institutional investors are increasingly allocating capital to ESG-focused strategies and stakeholder capitalism models, reflecting a shift away from pure shareholder primacy. Meanwhile, policymakers in the EU and Canada have introduced new corporate governance rules requiring greater transparency on income distribution and environmental impact.