The report, Where have all the wages gone, shows that over the last 30 years the share of national income going to wages has fallen from 59% to 53%. Over the same period the proportion of GDP going to profits has increased from 25 to 29%, while the share of income spent on taxes and subsidies has been broadly consistent at around 11%.
This means that the average worker in the UK failed to share in the country's economic success before the financial crisis, losing out on £7,000 in lost earnings on average, the TUC says.
The report claims that the main reason for the changing share of gains from economic growth has been the decline of industries that spent a high proportion of turnover on wages, such as manufacturing, and the expansion of industries that have a far higher profit margin, such as financial services.
The report also concludes that the entirety of the rising profit share across the economy has gone to just one industry, financial services, which has increased its share of total UK profits from 1% in 1980 to 15% today.
The TUC argues that the success of financial services and the City has come at the expense of both workers and other industries, which failed to benefit from the economy doubling in size since the late 1970s.
It calls for more effort to diversify Britain's economy away from the City, particularly given the effect of the financial crisis, which forced the Government to inject up to £1 trillion into the banking sector to keep it afloat.
TUC general secretary, Brendan Barber said: "The falling share of economic growth going on wages over the last 30 years, combined with widening pay inequality, has left the average worker £7,000 a year worse off today.
"You'd expect business owners across the UK to have benefitted from the tens of billions of pounds lost from people's pay packets. But instead the entirety of those lost wages have simply lined the profits of financial firms.
"While rising City profits has been good news for a small number of shareholders and the Treasury tax-take, it's been a disaster for the wider economy. The City's hoarding of profits has stifled other industries, reduced business investment and made all but a tiny rich clique of the UK workforce worse off."
Barber added: "Everyone now agrees we need to rebalance the economy. But the main ways to achieve this, rising investment, more high value manufacturing and engineering, and faster growth in new creative industries - are all being held black by the continuing dominance of the City.
"If the Government really want a more balanced economy that all workers and businesses can benefit from they need to be more courageous in standing up to the City. Ministers mustn't forget that financial firms did more to cause the crash than any other industry, and will block any reform that weakens its influence."
The report was produced using official statistics by Howard Reed, founder of Landman Economics, and Jacob Himmelweit, a fellow at the New Economics Foundation.
