Recognizing that wages in America have been stagnating for years, JP Morgan Chase CEO Jamie Dimon announced that the bank was giving 18,000 of its lowest waged employees a 20% pay raise. Now, that sounds really generous except when you looked at the details and realize just how laughable it is. In a vain glorious New York Times Op-Ed, Mr. Dimon laid out the rational for the raise.
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. [..]
While a higher wage is important, so are benefits. Our lower-compensated employees receive a medical plan — subsidized up to 90 percent by the company — as well as dental, vision and other coverage. Many of these and other benefits, including a 401(k), pension, a special annual award, paid family leave, paid vacation and bereavement, have been increased in recent years. In total, the annualized value of all of our benefits for these employees is on average approximately $11,000 a year above their existing wages.
That works out to $480 to $660 per week. Even with the benefits, that as Mr. Dimon says are quite generous, it would be difficult for a family of four in New York City to even find housing let alone feed and clothe itself. Even at the higher pay, there would be little to no room for anything extra, like a movie or dinner out or saving for travel on that paid vacation.
Meanwhile, Mr. Dimon’s own pay package is the equivalent of $27 million per year, up by a third from last year.
Dimon’s total pay for 2015 rose to $27m from $20m last year. In January, JPMorgan increased Dimon’s pay by more than a third, subject to various performance tests over three years before he is paid out in full. His base salary remains at $1.5m, but he receives a cash bonus of $5m, down from $7.4m last year. The remaining $20.5m comes in the form of performance share units (PSUs).
Dimon’s package nonetheless reflects the banking industry’s changing sentiments over executive pay. Last year JPMorgan shareholders voted against existing executive pay policies, forcing the bank to reform the ties between pay and performance. Dimon came under criticism for a $7.4m cash bonus that institutional shareholder groups ISS and Glass Lewis described as lacking “a compelling rationale”. [..]
The pay packages for chief executives at the top six US banks rose by an average of 10%, or almost twice the rate of their European rivals. In 2015, the chiefs of JPMorgan Chase, Goldman Sachs, Citi, Wells Fargo, Bank of America and Morgan Stanley were paid an average of $20.7m including salaries, bonuses and pension contributions.
Of those, Jamie Dimon was the highest-paid executive with a pay package of $27.6m.
According to a 2014 government study, there are over 1.7 million people working in the banking industry, of that about 500,000 are making less than $15 per hour. The banking industry can do better than a paltry 20% raise.