At its heart, the question posed by Rep. Katie Porter (D-Calif.) to JPMorgan Chase CEO Jamie Dimon was simple: How should a woman who lived in her district manage the fact that her job with Dimon’s company didn’t pay enough to cover her bills? With a take-home pay of $35,070 a year, including a $750 bonus, the employee came up nearly $600 short a month on her expenses, even excluding costs such as clothes and medication.
“I don’t know,” Dimon replied. “I’d have to think about that.”
“Would you recommend that she take out a JPMorgan Chase credit card and run a deficit?” Porter asked.
“I don’t know. I’d have to think about it,” Dimon replied, this time somewhat curtly.
“Would you recommend that she overdraft at your bank and be charged overdraft fees?” Porter asked.
“I don’t know,” Dimon replied again. “I’d have to think about it.”
Porter’s question wasn’t just about that one Chase employee, of course. It was, instead, about a central issue in American politics: The divide between the richest Americans and everyone else.
Data from the Economic Policy Institute shows the slow growth in the annual salary for Americans over the past several decades.
President Trump has touted recent increases in the hourly wage as evidence that his economic policies are working. Last month, we noted that the February jobs report included some specific data that bolstered that idea. Real earnings — earnings adjusted for inflation — had indeed increased more quickly in recent months.
Over the long term, though, those inflation-adjusted earnings increases have been modest, at best. Among nonsupervisory employees, real hourly earnings hit $9.38 in March. That’s down slightly from February and at the same level earnings were more than 40 years ago.
CEOs, by contrast, have done very well for themselves. This chart from EPI shows both CEO and overall employee compensation by year. On the scale of millions of dollars, overall employee compensation just looks like a blue line running along the bottom of the chart.
(The CEO data above includes compensation from the exercising of stock options.)
It’s not new that CEOs make more than their employees. In 1965, for example, CEOs made 20 times what their employees made, according to EPI. EPI’s projected data for 2017, published last year, figured that CEOs were now making 312 times what their employees made.
That’s an average CEO and an average employee in EPI’s data set. In the example offered by Porter, we’re talking about a woman who makes $16.50 an hour compared to a man who made $31 million last year, thanks to his company’s having earned record profits.
Those profits were boosted to a significant degree by Trump and the Republican tax bill enacted in late 2017. While Trump often celebrated his expectation that wages would go up thanks to the tax bill, Bloomberg reported on Friday that the primary beneficiaries weren’t people like Porter’s constituent but, instead, people like Dimon.
On average, Americans saw a tax cut of about $1,600, Bloomberg’s Joe Light reports.
“The top 1 percent of income earners saved 2.3 percentage points, according to Urban-Brookings, or $51,140,” Light writes, citing data from the Urban-Brookings Tax Policy Center. “The top 0.1 percent, who make more than $3.4 million a year, saved the same amount in percentage terms as the average Joe, but in dollar terms made out with $193,380.”
In other words, people earning what Dimon earned on average saw tax savings that amounted to more than five times what Porter’s constituent earns in a year.
As for the direct comparison of the constituent’s earnings with Dimon, her company’s CEO? It looks like this.
How does that gap get closed?
I don’t know. I’d have to think about it.