The jobs report for July was even better news for workers than the headlines suggest. Jobs, weekly hours and hourly earnings all rose strongly for the month. The combined effect was to lift private-sector wage income by 0.8%, almost 10% on an annualized basis.

While the pace is unlikely to stay so strong in coming months, a tighter labor market will continue to favor workers in their wage negotiations. This reinforces a little-noticed shift in the economic landscape: the swing in the economic pendulum away from capital and back to labor.

It’s a bit of evidence that much of the hardship suffered by workers in recent years is not a permanent feature of the economy. Rather, it’s a result of an unusually deep recession and weak recovery, which are now being corrected. The longer-term wage picture remains troubling, though for reasons having nothing to do with the division of income between labor and capital.

First, a bit of background. In Thomas Piketty’s bestseller “Capital in the Twenty First Century,” the French economist concluded from several centuries of data that capitalist economies inherently tend towards growing inequality. Specifically, when the return on capital is higher than the economic growth rate, the share of all income going toward the owners of capital (who tend to be wealthy) inexorably grows.

At first glance, the data for the U.S. seemed to bear him out. Between 1980 and 2013, the share of gross domestic income going to wages and salaries ratcheted steadily down from around 58% to 53%, while the profit share grew.

But closer examination revealed a different story. Gross domestic income contains not just labor income and profits but several other sorts of income. One is depreciation, a measure of how much income must be reinvested to maintain the current level of the capital stock. Its share of GDI has risen over time as business investment shifts to computer equipment and software, which depreciates rapidly. The second is rental income of persons, a measure of how much households benefit by in effect acting as their own landlords. That, too, has been rising over time with home prices and rents. (My calculations do not adjust for what homeowners pay in mortgage interest, which has been going down.)

If these two categories are subtracted from GDI, there is little trend in labor’s share: between 1980 and 2007 it fluctuated around 67%.  The profit share moves more sharply, averaging 11% while peaking well above that in the 1990s and mid 2000s.

After 2007 the labor share does drop dramatically, mostly because the recession devastated employment and wages. As a result, the adjusted labor share hit bottom in 2014 at around 64% while the adjusted profit share hit a record of more than 15%.

Since then, the labor share has risen and the profit share has fallen. This reflects both sturdy gains in jobs and a very modest acceleration in wages, and a steep hit to profits because of the drop in oil prices, a higher dollar and a squeeze on bank profits from lower interest rates.

The net result is that in the first quarter, the labor share was 66.1%, almost back to its prerecession average, while the profit share had slid to 13.6%. As July’s report shows, labor income has continued to improve, although profits also turned up in the second quarter, so it’s unclear what has happened to relative labor and profit shares. Second quarter earnings reports show in six industry sectors, margins were narrower than a year earlier, and in three they were wider. In one they were stable.

This is good news for workers only in a relative sense. Labor may no longer be losing to capital, but ideally both labor income and profits should be growing robustly. The reason they aren’t is that productivity growth has collapsed. If output per worker is barely growing, meaningful gains in real wages can only come at the expense of profit margins. Thus, if workers continue to  record solid wage gains in coming quarters, expect the stock market to fret.