However, a new report by JPMorgan Chase, one of the largest financial conglomerates in the country, shows that greater corporate profits do not translate to higher wages, but are a product of not doing either. A direct quote from the report, entitled Twilight of the Gods, "reductions in wages and benefits explain the
majority of the net improvement in margins. This trend has continued; as we have shown several times over the last two years, US labor compensation is now at a 50-year low relative to both company sales and US GDP." (bold text from original). The conclusion is that corporations, we can safely assume, are well aware of the fact that subsidies, tax breaks, and further federal leniency in allowing corporations to create ever larger profits are not translating into more security for middle-class workers. Furthermore, this trend, as stated in the report, was already well in effect before the Great Recession, beginning around 2000-2007. By the report's own admission, it is this culling of worker compensation that has created "profit margins have reached levels not seen in decades."
So what happens when Americans suddenly start saving money instead of spending it?
This is the "paradox of thrift," an economic concept which has been floating around for a few hundred years. Until recently, it was largely an abstract theory. But as Americans are tightening their belts - or more to the point, having their belts tightened for them, due to tougher credit restrictions and chilly unemployment numbers - it's becoming a significant force in our economy's slow recovery.
I have watched debate on this story flourish in several places online. It's being debated by a lot of people with a lot of vigor. Some of them seem to have a personal stake in the fight, as if we were talking about the relative ugliness of their children. Others obviously know a million times more on the topic than I ever will. But it's interesting to watch the blaming and finger-pointing, the counter cries of "Blame the poor" and "Eat the rich."