JPMorgan Chase CEO Jamie Dimon told the The New York Times in mid-July that the company will lift employee pay for 18,000 staff members from $10.15 per hour to between $12 and $16.50 per hour, depending on geographic and market forces. Dimon said the pay increase is the “right thing to do” and that it will “enable more people to begin to share in the rewards of economic growth.”
Starbucks CEO Howard Schulz said in a similar message on July 11 that it would be giving its workforce a 5% across-the-board raise in October. The company also announced it would be adding a future annual enhancement to its stock option program, doubling the annual award for partners that reach two years of continuous service in the company. The combined compensation increases would amount to raises of up to 15% for some employees.
“Striking the delicate balance between profit and a social conscience is a responsibility I take personally, said Schultz. “Over the years, we have viewed our total compensation approach as the best way to create long-term opportunity for partners.”
Dimon said that raising wages is good for the company and helps Chase attract and retain talented people in a competitive environment. He said that higher wages are “good expenses” and “an investment” that will improve long-term prospects.
He also acknowledged that not every business can afford to raise wages. Yet, he encourages these companies to find local partners to address economic inequality and to provide continuous training, and identify mentors to help sharpen employee skills. Chase will also invest more than $200 million in 2016 to train thousands of entry level employees in its consumer banking business.
A number of other large employers have raised wages in recent years, often citing market forces. Walmart announced in January 2016 that more than 1.2 million of its workers would receive pay raises as part of its two-year investment in its workforce. In April 2015, health insurer Aetna announced it would raise wages for the lowest paid workers to $16 per hour. CEO Mark Bertolini said he believes the raise can eventually pay for itself by making workers more productive. Aetna employee Fabian Arredondo told NPR that with finance being one of the main stresses in people’s lives, a little boost can go a long way in employee happiness.
Certainly, not all executives and economists share the enthusiasm for raising wages. Alex Tabarrok, an economist at George Mason University, told NPR that he’s skeptical of raising wages as a solution to increasing productivity. He says most firms already calculate what wages are optimal for attaining the highest productivity. “There’s no easy solution to raise wages and increase profits at the same time—it’s just not going to happen,” said Tabarrok.
Those in industries that rely on low-cost labor and argue against raising the minimum wage are unlikely to voluntarily raise wages anytime soon. Former McDonald’s CEO Edward Rensi told Fox Business Network in May that employers would be more productive by cutting the workforce or looking for more cost-cutting measures as opposed to raising wages. “It’s cheaper to buy a $35,000 robotic arm than it is to hire an employee who’s inefficient making $15 an hour bagging French fries,” said Rensi.