Jeremy Pearce argues in Liberty Street Economics that profit margins widened

Jeremy Pearce argues in Liberty Street Economics that profit margins widened

Jeremy Pearce’s post was published October 15, 2026. He examines whether firms captured a larger share of rising revenue per worker. Using U.S. Compustat firms across manufacturing and services, Pearce reports that real revenue per worker grew faster in 2019–2025 than in 2010–2019, alongside faster growth in nonfarm-business output per hour. He finds that gross and operating profit margins also increased in the later period. A profit margin is the share of sales a firm keeps after paying its costs. Higher revenue per worker alone cannot show whether workers or firms gained; Pearce says part of the gains surfaced in wider margins. Firms with higher R&D expenditure relative to sales in 2019 saw larger subsequent operating-markup growth, while firms with higher capital intensity did not show the same significant pattern. Pearce says this is consistent with returns to investment in intangibles. He ends by asking whether rising margins reflect significant investment in intangibles or a windfall for firms, a question he leaves for future work. The analysis excludes several industries because of productivity-measurement challenges.

Publication: 3b108ed1-0d9e-9c6e-4816-c8721927e353

attribution — pass: The reading correctly attributes the post and its findings to Jeremy Pearce, a research economist at the Federal Reserve Bank of New York, writing in Liberty Street Economics. Findings stay framed as his reports rather than established facts.

Jeremy Pearce is a research economist in the Federal Reserve Bank of New York’s Research and Statistics Group.

summary — uncertain: The summary is faithful, but key terms are unexplained and no definitions are supplied. It never says Compustat covers public firms, and it does not explain intangibles, capital intensity, operating markup or nonfarm-business output per hour. It also leaves out Pearce's framing that rising margins fit ongoing declines in labor's share of output. That is the source's main stake for workers. Smallest repair: add 'public firms' for Compustat, gloss intangibles (e.g., R&D), and include the attributed labor-share sentence.

The increase in profit margins is consistent with ongoing declines in the labor share of output.

date — pass: The October 15, 2026 publication date matches the source dateline and originalPublished, and the retrieval date is also given. The modification timestamp falls on the same day, and the cited material is plainly part of the original post. Nothing in the reading relies on hindsight or on later events. The evidence is a publisher page, so no archive disclosure is needed.

October 15, 2026 Revenue per Worker Is Up. Are Firms Getting a Larger Share?

support — pass: Each claim matches the source text: the growth acceleration, the margin increases, the R&D versus capital intensity pattern, and the open question about intangibles versus windfall. The excluded industries and Pearce's 'consistent with' framing are both preserved. No benefits or costs are asserted beyond what the source states.

Part of the gains surfaced with wider profit margins: on a reasonable baseline, the operating margin rose over 2 percent a year from 2019 to 2025.

media — pass: No media candidates were supplied and no media is selected, so there is nothing to check for identity or relevance.