45 years ago, the most valuable company in the world had 400,000 employees. Today's champion is worth much more and is more profitable with only 1/10 the staff
Big money goes to capital, not labor, the WSJ points out in an analysis explaining how much things have changed.
The image is striking. In the mid-1980s, IBM, “the engine that built capitalism,” was America's most valuable company, one of its most profitable, and a top employer with nearly 400,000 employees.
Today, Nvidia is worth much more, is incomparably more profitable than IBM – but doesn't even employ 1/10 of the staff! According to available data, it has 36,000 employees.
In this comparison, the Wall Street Journal points out in its analysis, lies the core of the modern economy: returns are increasingly directed to capital and less to labor.
The big change: from wages to profits
The trend is not new, but in recent years it has become evident. From the early 1980s to the present, the share of labor in the economy's total income has fallen dramatically, while the share of corporate profits has strengthened.
Simply put, from every euro produced, less goes to wages and more to profits, dividends and valuations.
This, the WSJ notes, explains why the economy can be “doing well” on paper — with stock markets at all-time highs and record profits — while households remain cautious and often pessimistic. The growth is there, but it's not as well distributed as it used to be.
Why capital is constantly gaining ground
In the 1980s and 1990s, the weakening of unions and the spread of globalization reduced workers' bargaining power. But at the same time, the very nature of capital has changed.
Companies have invested less in factories and heavy infrastructure and more in software, data, algorithms, and intellectual property—assets that scale easily and don't require many jobs.
Automation began in industry, replacing manual labor with machines and robots. The result was a dramatic increase in productivity and cheaper products for consumers. But for workers it meant something else: good, stable factory jobs were replaced by lower-paying positions elsewhere in the economy.
The pandemic was a parenthesis – not a reversal
The pandemic period seemed, for a while, to reverse the situation. The labor shortage gave workers bargaining power and wages rose. But inflation has absorbed much of these increases. Profits, after a brief decline, hit new all-time highs.
At the same time, technology – and especially big tech companies – has become dominant. Modern business models are based on networks, standards, algorithms and platforms. They don't need armies of employees to grow. They need capital, data and scale.
When capital and labor are interconnected – but not equally
In today's champion companies, the line between capital and labor is becoming increasingly blurred. Top engineers and designers are paid in stock, turning their work into a form of capital.
But this concerns a narrow elite of workers. For the masses, the picture is different: stagnation, uncertainty and greater exposure to technological competition.
What's left?
The question is not whether this trend will continue, but how we will manage it. A return to an economy in which labor absorbs most of the profit seems as unlikely as a return to the unions and industrial relations of the 1960s.
The challenge is whether societies will find ways to share the benefits of productivity more equitably – or whether the gap between capital and labor will become an unbridgeable fault line in the age of artificial intelligence.
