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Shareholder Power and Workers’ Labor Market Outcomes

Abstract: Public corporations account for about half of private employment in the United States.1 These large corporations have undergone radical changes in their ownership structure over the past several decades.2 Figure 1 illustrates the changes—total block institutional ownership, defined as the total share of equity owned by all institutional investors that own at least 5% of the shares for public firms, on average increased fourfold from 1980 to 2023. As a result, the block institutional shareholders, on average, held over 20% of the equity shares of U.S. public corporations by the end of the period. In parallel, figure 1 (panel B) shows that the labor share, as measured by the ratio of total compensation for employees to output, exhibited a declining trend.

JEL Classification: G23; G32; J23; J31; E24; E25;

Bibliographic Information

Provider: Federal Reserve Bank of Chicago

Part of Series: Chicago Fed Letter

Publication Date: 2025-03

Issue: 505

Pages: 6