As the distinction between wages and salaries and returns on capital is usually quite vague in the case of self-employment, the debate on the share of wages and salaries in China mainly arose from a lack of statistical distinction between the of standard employment and self-employment economic sectors. After making such a distinction, this paper estimates the scale of the two sectors in terms of output and factors of production, and calculated the share of the wages and salaries. It is found that the share for the standard employment economy has been declining in general since 1978. The paper also theoretically estimates the share of wages and salaries in the standard employment economy using the production function, and the same trend is revealed. It is therefore concluded that the decline of the share of wages and salaries seems inevitable, and it should be explained from the perspective of the growth mode. However, since this paper also finds the substitution elasticity of capital and labor to be smaller than 1, the decline of share of wages and salaries must also have its reasons in the deviation of factor price from marginal output. Therefore, to improve income distribution and form a fair and reasonable distribution pattern in China, efforts must be made to change the growth mode and to redress the distortions of factor prices by putting in place a better market-based pricing mechanism for production factors.