JPMorgan Chase raises its minimum wage by 20%

CEO Jamie Dimon says ‘a pay increase is the right thing to do’ after bank sets baseline pay in line with ‘Fight for $15’ movement

JPMorgan Chase is to raise its guaranteed minimum wage for employees by a fifth, placing its baseline pay in line with the national “Fight for $15” movement.

“A pay increase is the right thing to do,” the chairman and chief executive, Jamie Dimon, wrote in an opinion piece published in the New York Times.

“Wages for many Americans have gone nowhere for too long. Many employees who will receive this increase work as bank tellers and customer service representatives. Above all it enables more people to begin to share in the rewards of economic growth.”

Under the new guidelines, the bank will raise pay for 18,000 employees to between $12 and $16.50 an hour for full-time, part-time and new employees, depending on location and division. The bank’s current minimum wage is $10.15 an hour (plus benefits), about $3 above the current national minimum.

JPMorgan is the first of the major US banks to take action in the minimum wage debate, having allowed smaller institutions such as Amalgamated Bank to take the lead.

But the latest move will be contrasted against Dimon’s own pay package.

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”.

Dimon, one of Wall Street’s longest-serving executives, saw his pay award peak at $30m in 2007. During the financial crisis the following year, his remuneration package dropped to a salary of $1m and no incentives.

However, in recent years executive pay has risen again to near pre-recession levels even as bank profits have remained constricted by low interest rates and problematic global economic conditions. Pay for big bank chief executives jumped nearly 7.6% in 2015, 10 times faster than a year earlier, according to analysis by the compensation company Equilar and the Financial Times.

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. That contrasts with a 2014 government study that found of about 1.7 million people working in retail banking in the US, almost one-third – more than 500,000 people – are in jobs with median hourly wages below $15.