It's hard not to jump straight to the cynical theories for why Jamie Dimon is increasing the minimum wage at JPMorgan Chase, or at least why he chose the op-ed page of the New York Times to announce that he was.
First, the timing. The op-ed came on Tuesday morning, just before Federal Reserve Bank of Minneapolis President Neel Kashkari was to hold the latest event to discuss his effort to end the era of too-big-to-fail banking. Whether intended or not, Dimon's op-ed may be able to deflect some of the attention that the break-up-the-banks enthusiasts have attracted. It serves as a reminder that banks like this aren't made up entirely of fat cats pulling down six, seven, and eight-figure bonuses and prone to stirring up the occasional global financial crisis. They also employ thousands of people who make $10 or $12 an hour.
With wealth inequality a hot topic, increasing the starting pay for 18,000 employees to between $12 and $16.50 an hour -- and making a big show of it in the liberal newspaper of record -- might help build some much needed political capital, which has been running dangerously low at big banks even as they have stockpiled regulatory capital rapidly.
Yet from a business sense, there's also simple and logical motivation that Dimon mentions briefly in his op-ed: "It’s good for our company, helping us attract and retain talented people in a competitive environment."
Put more simply, the bank might not have had much of a choice in an era of sub-5 percent unemployment. Consider that $12 an hour still places the minimum wage at the bank in some places a dollar an hour below that of Costco, which increased entry level pay to $13 to $13.50 in March. Just on Monday, Starbucks announced that it was raising wages by as much as 15 percent. Wal-Mart, McDonald’s, Target and others have also decided to increase pay.
Many of the jobs affected at JPMorgan Chase will be old-fashioned tellers working at bank branches. And the more intriguing question facing the industry is how many branches big banks need to keep open at all, given that competition from digital-only rivals is fierce and technology has rendered the need for bricks and mortar almost obsolete when it comes to retail banking. (JPMorgan is planning to close 150 branches this year, and another executive at the company's investor day in February said that 90 percent of all teller transactions could be handled on a mobile device or ATM.)
Still, "It's not like somehow they (branches) are going to disappear overnight," Dimon said at a Sanford C. Bernstein & Co. conference last month. "I just don't buy that at all."
Boiled down to sound-bite form, Dimon's rationale is: "People like to visit their money."
In his view of the world -- which no doubt has the potential to influence competitors -- the operational functions of a bank branch will continue to decrease, but the advisory part will grow.
"Think of small business advisers, mortgage loan officers, investment officers, all those things," he told the Bernstein conference.
The need for low-paid tellers to physically conduct transactions has been literally decimated, many of those jobs in the industry have been eliminated, and the square footage of bank branches is shrinking.
But there's also the potential political backlash that would come from shutting branches down en masse. In that sense, these 18,000 low-paid workers start looking more like an asset than just a cost line. So why not pivot the strategy behind branches rather than abandon them? Make them seem more like an Apple Genius Bar than a fast-food drive-in.
Maybe workers start as a bank teller, an occupation long known for heavy turnover, but earning a few bucks more an hour makes it feel a bit more like the start of a career path than a McJob. Perhaps they take advantage of some of the training offered at the bank -- Dimon wrote that "more than 40 percent of our tellers get promoted into higher-paying roles within five years, and we now have five very senior regional directors who worked as tellers."
At least that's the pitch, as outlined in an op-ed that seems to be aimed as much at potential entry-level workers as it is at those upset with income inequality.
Will it be enough to make an entry-level job at a Chase branch more attractive than Costco?
Maybe Dimon should've mentioned they won't have to lift as many heavy boxes.
This column does not necessarily reflect the opinion of Bloomberg LP and its owners.
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