American Corporate Efficiency Soars as Employee Revenue Rebounds

2026-10-16 economy

New York, Friday, 16 October 2026.
New York Fed research shows U.S. revenue per worker doubled to 2.2% annually after 2019, driving wider corporate profit margins rather than higher employee compensation.

Accelerated Revenue Growth Since 2019

A new analysis published by the Federal Reserve Bank of New York on October 15, 2026, reveals that U.S. corporate revenue per worker has accelerated sharply since 2019, expanding at twice the pace recorded throughout the 2010s [1][2]. Based on corporate SEC 10-K filings, the research examines whether businesses are retaining a larger share of productivity gains relative to employee compensation [1]. For C-suite executives and policymakers, the data highlights major shifts in corporate efficiency, profit distribution, and workforce economics following the post-pandemic restructuring [1]. The study was published by Jeremy Pearce, a Research Economist at the Federal Reserve Bank of New York, marking a significant update to economic productivity metrics [1][3].

Productivity and Labor Dynamics

U.S. nonfarm-business labor productivity growth significantly decelerated from 3 percent annually in the late 1990s to approximately 1 percent annually between 2010 and 2019 [1]. However, labor productivity growth rates for nonfarm-business output per hour increased to 2.2 percent annually from 2019 to 2025, compared to 1.0 percent annually during the 2010–2019 period [1]. Real revenue per worker for U.S. Compustat firms accelerated from 0.7 percent growth per year (2010–2019) to 2.2 percent growth per year (2019–2025) [1]. This acceleration appears in public firms’ revenue per worker, though the study excludes agriculture, utilities, finance, real estate, and public administration sectors due to productivity measurement challenges [1][5].

Surge in Corporate Profit Margins

While revenue per worker increased, firm profit margins increased significantly during the same period [1]. Gross margins rose from 34% in 2019 to 37% in 2025, representing a relative increase of 8.824 percent [1]. Operating margins increased from 16% in 2019 to 18% in 2025, reflecting an annual growth rate of 2.4% [1]. Research indicates that recent increases in profit margins among public firms are consistent with ongoing declines in the labor share of output [1][7]. Workers are getting a smaller slice of the American economy than almost any time on record, with wages and salaries making up about 43% of gross domestic income in the first quarter of this year [7].

Economic Implications and Future Work

R&D-intensive firms experienced larger gains in operating-markup growth, where firms with 10% higher R&D expenditure relative to sales in 2019 saw 0.7% higher operating-markup growth over 2019–2025 [1]. Higher capital intensity did not significantly predict profit margin patterns, suggesting returns are linked to intangible intensity rather than capital intensity [1]. Jeremy Pearce noted that whether these rising margins are returns to significant investment in intangibles or purely a windfall for firms is a topic to explore in future work [1]. The discussion paper is part of the Liberty Street Economics series and carries the publication number 20261015 [2].

Sources

Labor Productivity Corporate Revenue