Oh Shut Up, Katie Porter

A video of US Representative Katherine “Katie” Porter questioning JP Morgan CEO Jamie Dimon has gone viral on Facebook. In this video, Porter speaks of a hypothetical JP Morgan employee (whom we’ll call Plausible Patricia) working an entry level position at an Irvine, California branch, who ends up with a monthly deficit of USD 567 because she’s apparently not paid enough to meet her expenses. Porter spins the teary yarn of a single mother of a six year old who still co-sleeps in a one-bedroom apartment and drives a 11-year old minivan.

Attempting a defence, Dimon indicates that the job in question is an entry-level position that requires merely a high school diploma to qualify. The point is lost on Porter, who furthers her rhetorical attack on Dimon, who by now has decided to mutter stock responses while the Representative lets off some steam. Hopefully, the committee eventually resumed its business – which is discussing high-level policy issues related to the banking and financial services sector.

While the Social Democratic novitiates on Facebook are cheering Porter’s assault as a brave confrontation of an economic villain, those inclined to take a more reasoned view of this absurd spectacle would rapidly realise that this is merely a stunt to impress dim-witted idealists.

The wage that Porter mentioned was USD 16.50 an hour. For starters, this 37 per cent higher than the USD 12 minimum wage for California that came into effect on 1 January 2019. Furthermore, this tirade suggests that JP Morgan is responsible for Plausible Patricia’s personal outcomes rather than her self and her community.

How can JP Morgan be to blame? It is a for-profit corporation that operates in a free market, and is subject to competition from other players. As a former JP Morgan employee myself, I know for a fact that the bank pays fair wages that are consistent with market standards, and also has a substantial performance-linked component which Porter may have omitted from her wage calculation. Dimon is right that Plausible Patricia may someday have his job. Former colleagues who joined JP Morgan at entry level roles about a decade ago have risen to Vice Presidents and above, and have even moved countries as they advanced in their careers.

Alright, let’s assume that JP Morgan paid all entry level roles a minimum of USD 50,000 a year. Concurrent adjustments in salaries across the hierarchy will result in billions of dollars in additional wage expenses. Where do you think this money will come from? Interest rates and bank fees will have to rise, lowering access to credit, and making homes, cars, and flat-screen TVs dearer for all US residents.

Another common criticism that I’m seeing in these comments is the wage difference between Dimon and Plausible Patricia. Critics are sorely mistaken on two points here:

First the fact that Jamie Dimon received USD 31 million in salary doesn’t mean that he had it made. His earnings for 2018 comprised a base component of USD 1.5 million, which is quite reasonable for a person in his position, and USD 29.5 million in performance pay – a sum derived from a complex formula that takes into account JP Morgan’s financial performance, share price, capital ratios, and industry standing. Furthermore, this pay is liable to “clawback” if the bank misses long-term performance goals, fails an audit, or loses a pretty packet due to something like l’affaire London Whale. Second – comparing pay for an entry level position to that of a CEO responsible for 250,000 employees and the interests of thousands of shareholders is asinine.

Porter conveniently ignores the fact that the wider issues related to living costs – housing, food, and transportation expenses for instance – are usually a product of government policy. She should actually be asking her colleagues in the California delegation why housing is so expensive and why public transportation is deficient. Also, during the course of her apparently well-researched example, why did Porter not deduct taxes due? This would have pushed Plausible Patricia over $650 in the red each month. Patricia’s home state of California has the highest State Income Taxes in the USA.

Ultimately, Plausible Patricia needs to take personal responsibility for her life. Yes, the odds are often stacked against people based on gender, race, disability, etc, but intent and tenacity are the greatest factors in life outcomes. If Plausible Patricia is indeed a real person, she needs to take a long hard look at her life and decide how she must bring more value to the table to deserve a higher wage.

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