Jaime Dimon, the Chairman and CEO of JPMorgan Chase, announced that the bank will raise the pay of about 18,000 tellers and branch workers in 75 cities. The announcement appeared in an opinion article in The New York Times:
"Our minimum salary for American employees today is $10.15 an hour (plus meaningful benefits, which I’ll explain later), almost $3 above the current national minimum wage. Over the next three years, we will raise the minimum pay for 18,000 employees to between $12 and $16.50 an hour for full-time, part-time and new employees, depending on geographic and market factors."
The article discussed the bank's non-wage benefits for employees, why the pay increase was the right thing to do, and related investments:
"It is true that some businesses cannot afford to raise wages right now. But every business can do its part through whatever ways work best for it and its community. It can identify local partners to address economic inequality. It can encourage and provide continuous training, teach leadership capabilities and identify mentors to help sharpen employee skills. In our case, we will invest over $200 million in 2016 on training for thousands of entry-level employees in our consumer banking business... We are also investing $325 million in career-oriented education aligned to growing sectors. This fall, through partnerships with education organizations, we will provide 10 states with up to $2 million each to strengthen and expand career-focused education in their school systems..."
"Raising the minimum wage has the potential to vastly improve the lives of low-income workers who are currently employed—but it could also limit opportunities for future job seekers... Proposals for raising the minimum wage have strong political appeal. It would be wonderful, of course, if it were that easy to help low-income earners who are struggling. Unfortunately, despite the well-meaning intentions behind this effort, non-business actions that force businesses to absorb higher costs would likely carry hidden costs. Though higher wages would undoubtedly benefit low-earning workers who retain their jobs, those who become unemployed, or future potential workers who are trying to get a start in the job market, could find fewer opportunities to rejoin the labor force."
Will the bank's hiring slow as a result? Time will tell.
An August, 2015 report by the National Employment Law Project found that while bBank tellers comprise the largest banking-related occupation in the United States, with almost half a million workers nationwide, three in four (74.1 percent) earn less than $15 an hour, compared with 42.4 percent of the total U.S. workforce. Tellers’ median hourly wage is just $12.44.
JPMorgan isn't the only bank to raise the pay of its employees. In January 2016, Bangor Savings Bank raised its minimum wage to $13.00 an hour. In August 2015, Amalgamated Bank raised its minimum wage to $15.00 per hour. In July 2015, C1 Bank raised its minimum wage to $15.00 per hour.
In 2012, JPMorgan Chase was part of a group of banks that paid $25 billion to resolve allegations of foreclosure abuses of homeowners' mortgages. The bank paid $13 billion in 2014 to settle charges by the U.S. Justice Department about alleged wrongdoing with mortgage-backed asset securities. Later that year, we taxpayers learned that large portions of the fines were tax deductible.
Dimon's April 6, 2016 letter to shareholders about the company's performance in 2015 said:
"Our company earned a record $24.4 billion in net income on revenue of $96.6 billion in 2015. In fact, we have delivered record results in the last five out of six years, and we hope to continue to deliver in the future. Our financial results reflected strong underlying performance across our businesses..."
The bank has done well financially. It's good that the bank shared some of its success with employees, but why not raise the minimum wage with a $15.00 per hour floor? Dimon's pay (including incentives rose 35 percent last year, from $20 million to $27 million. One person summarized accurately the bank's pay increase in a comment on Robert Reich's Facebook page:
"I think that pushing larger crumbs off the table isn't quite the same as setting a place."
Dimon's statement in the New York Times did not mention the total cost of the pay increase and related programs. Even if the total is $1 billion (spread over 3 years), it seems that JPMorgan Chase can easily afford that without a slow-down in hiring. If the bank can afford multiple, massive settlement agreement payments, it can easily afford the pay increase for its employees.
What do you think?