Sunday, July 17, 2016

Chase proposes to give employees a raise; pulls curtain on crummy world of retail banking and US economy

The major US banking corporation JP Morgan Chase has publicly announced pay raises on the editorial page of the New York Times.  You can read the opinion piece in the New York Times: "Jamie Dimon: Why we are giving our employees a raise."

It's strange when a big companies pay raise makes the opinion page of the most prominent newspaper in the country. It's like a PR announcement, opinion piece and half apology rolled into one.  Basically the piece admits, Chase has been sticking it to it's retail and low paid employees for years.

The Chase pay raise revels how inadequately our economy works for poorly and lower middle class people. The US economy continues to have major problems creating high quality jobs, paying decent wages and delivering a reasonable standard of living to people that work. Many of the chase employees qualify for food stamps in the states where they work.

Chase earned $24.4 billion dollars. The CEO of JPM Chase, Jamie Dimon, made $18 million in base compensation and 10 million more in options. Chase is proposing about a $3 dollar raise over the next 3 years for 18,000 employees.  That's about $37.4 million a year or $112 million over 3 years.

Announcement in the New York Times

Mr. Dimon, Chase and NYT all deserve credit for making the announcement on editorial page. We initially thought it was a publicity stunt, but they were aware of the negative press and Chase-basing that was going to happen. The real motive is to have a discussion of the retail labor economy in the US.

Mr. Dimon also mentions wage stagnation, inequality and limited corporate training and education. He deserves some credit for considering Chase may have contributed to some of these problems. We laughed at his support for Earned Income Tax Credit which is a wage and corporate subsidy that lets companies under pay employees.

Diversity in Retail Banking

Chase, Bank of America, Well Fargo and Citigroup also deserve some credit for hiring diverse staffs. Every bank branch I have visited had some Black or Hispanic people working there, first as tellers and later as Branch Managers. These were some of the first "professional" jobs available in minority communities. They gave opportunity to many when the only other alternative was teaching or working for the government.

Health benefits

We will give Chase some credit for offering health benefits. The plan covers health, dental and vision. The Chase plan is an average health plan but above average for retail.

The down side of Chase

Chase is one of the leaders in outsourcing.  In 2002, Chase signed one of the largest outsourcing deals in the US with IBM for $5 Billion dollars over 7 years.

Training, what training ?

The opinion piece also states Chase will spend money on training.  However corporate training is sham.  The skills being taught are those that affect the bottom line:  What our financial products are, how to sell more and better and how to comply with regulations.  Nothing to help an employee grow, learn a skill or move to a better job.

Banks as financial predators

The other undiscussed issue is that retail banking is basically a predatory financial service. The retail model operates on high pressure selling, high fees and limited competition.  The big four and other major banks effectively collude on fees and locations limiting access to lower cost banking services. The retail banks make limited investments in the communities they serve preferring instead to play the market or fund suburban mortgages.

What's it like to work in Retail Banking ?

There are lots of comments on web-sites about working in retail banking

A prominent one is called "Chase Sucks" which details the life of a retail bank salesman (also called personal banker or relationship banker). The stories on the website and in the comments detail a lowly paid grueling job.

Financial Analysis of pay raise

Chase pays $10.15 an hour to start or $21,000 to start for a 40 hour week.  But a lot of employees in retail employees work less: usually about 20-30 hours per week. Twenty hours a week earns $10,556 for 1 person and $15,834.

The federal poverty level in 2016 is, according to, $11,880 for 1 person and $16,080 to two people.  The federal SNAP level (food stamps) is $15,312 for 1 person and $20,712 for 2 people.

SNAP Qualification Guidelines

                        1 Person                     2 People
Federal            $15,312                      $20,712
NY                  $17,664                       $23,904 (working)
NJ                   $21,780                       $29,472 (185% of Federal Poverty Level)

For reference, Wal-Mart employees average $9.00 an hour.  CVS cashiers also average about $9.00 an hour.


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