Private enterprises typically pursue profit maximization, whereas state-owned enterprises (SOEs) embody both the economic man trait of profit-seeking and the strategic role of social governance. Against the backdrop of “reverse mixed reform”—in which state capital takes stakes in private firms—this paper investigates whether state shareholder governance promotes common prosperity from the perspective of labor income share. The findings show that state shareholder governance significantly increases the labor income share of private enterprises, a result that remains highly robust. Mechanism analysis reveals that the resource and strategic effects of state capital are key drivers, as state governance helps reduce internal income inequality and enhances employee-related social responsibility. Further analysis indicates that this effect is more pronounced when SOEs are of higher administrative levels, when local tax enforcement is stronger, when industry wage gaps are larger, and when labor intensity is higher. Moreover, state shareholder governance positively affects labor productivity and financial performance, suggesting that the increase in labor income share does not come at the expense of firm viability. These findings enrich the literature on determinants of labor income share, offer new evidence for certain debates, and provide insights for deepening mixed-ownership reform toward the goal of common prosperity.