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Critics skeptical of Dimon's altruistic pay raises for tellers


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Critics skeptical of Dimon's altruistic pay raises for tellers

Kiah Haslett is a reporterwith S&P Global Market Intelligence. The views and opinions expressed inthis piece represent those of the author or her sources and not necessarilythose of S&P Global Market Intelligence.

's JamieDimon planned wage hikesfor front-line employees bought his bank some valuable free publicity, as wellas the rancor of critics who called the statement "self-serving" andobscuring the labor market forces at work.

In aNew York Times op-ed, Dimonannounced plans to raise the minimum wage of $10.15 an hour for 18,000employees to between $12.00 and $16.50 an hour for full-time, part-time and newemployees. The move was panned by some critics who were quick to point out theself-congratulatory nature of the op-ed. They also discussed how marketfactors, rather than altruism aimed at offsetting economic disadvantages, couldbe an equally important variable behind the timing of the announcement.

Dimonwrote the reasons behind the move broadly include issues like "wagestagnation," "income inequality," "a lack of quality education"and "insufficient training and skills development." He stated plainlythat "a pay increase is the right thing to do."

Butothers were quick to point out things Dimon may have forgotten to mention:JPMorgan Chase's relentless push to further automation and headcount reduction.As recently as February,JPMorgan executives said almost 90% of teller tasks will eventually beATM-enabled and that the 2015 "transactional staff" headcount was12,000 less than it was in 2012, FTAlphaville pointed out in a July 13 post.

Criticsfurther noted that banks across the industry have transitioned the role oftellers. They said tellers have taken on a more universal role within thebranch and are undergoing more training associated with the growingsophistication of their jobs. Alphaville pointed out the remaining tellers mayrequire a "more sophisticated interpersonal skillset than wastraditionally needed," and that these employees would be compensated witha higher wage. There may be an expectation that these employees would be moreproductive than tellers of yonder days, Alphaville argued.

Otherspointed out that the wage hike would only fractionally increase costs at themassive bank, making it a relatively inexpensive move. Shane Ferro, a formereconomics reporter, calculatedthat this pay raise would cost the bank slightly more than $100 million a year,a figure she called "a rounding error for the bank."

Noninterestexpense at JPMorgan totaled $59.01 billion during full year 2015, including $29.75 billion in compensationexpense. The $100 million figure would have increased compensation expense by34 basis points last year and only increased total expenses by 17 basis points.

Theboard of directors awardedDimon $27 million in total compensation in 2015.

Butthe move may only serve to bring the megabank in line with its smallerbrethren. Miami Lakes, Fla.-based BankUnitedInc. Chairman, President and CEO John Kanas said that he was "frankly surprised" to hearthat a bank was paying tellers $10 an hour, saying during a July 13 segment on CNBCthat most smaller institutions pay around $15 an hour.

Dimonhas not been afraid to use the op-ed pages to herald his bank's operations. TheJuly 12 essay follows his April5 piece in The Wall Street Journal that discussed the connectionsbetween big and small banks and ultimately devolved into a with Independent CommunityBankers of America President Camden Fine.

Dimonhas been an occasional media darling,with The New York Times Magazine calling him "America'sLeast-Hated Banker" late in 2010, when the depths of the credit crisis wasstill fresh in the public's mind. But he has also , including forcomments made beforethe depth of the London Whale trading loss was uncovered.

Andwhile reasonable people may disagree as to whether the bank is acting out ofeconomic or altruistic interests, this was certainly a chance for JPMorgan togenerate public goodwill — opportunities that are rarer and rarer for largebanks. With the op-ed, Dimon might have proved his business chops once again bybuying some public amity at the small price of paying some of his employeesmore.