Featured: Jamie Dimon, CEO, JPMorgan Chase
Originally published: March 2, 2012
It's not that one-percenters make so much more than most everyone else. It's that some are so arrogant about it.
Consider these recent comments from Jamie Dimon , the CEO of JPMorgan Chase ( JPM ).
At the company's annual investor day Feb. 28, Dimon described journalists as overpaid -- even though, in reality, scribes are a fairly humble segment of the 99-percent crowd. They earn a meager median of $31,900 a year, according to PayScale.com, an online compensation data provider.
But even that amount is "just damned outrageous," according to Dimon, who pocketed $42 million in 2010, according to GMI , an independent corporate governance research firm.
"I think it's totally ridiculous," says Salley Shannon, the president of the American Society of Journalists and Authors, a group of independent and freelance journalists and writers. "It's tough to live in any major city on the median income for journalists, so how can we possibly be overpaid? I would challenge him to live on that income."
I agree with Shannon, which is why I'm making Dimon my One-Percenter of the Week.
How Dimon's pay compares
Living on a journalist's pay would probably be a challenge for Dimon, who is paid a lot even by CEO standards. Consider:
- His $42 million in 2010 was about 4.5 times the median of $9.3 million for CEOs at large companies that year.
- His 2010 pay was 849 times the 2010 median household income of $49,445. Assuming a 70-hour workweek and two weeks' vacation, Dimon made more in five hours that year than the typical U.S. household made all year.
- His 2010 pay was 828 times the median JPMorgan Chase pay of $50,700, according to PayScale, and 1,316 times the median pay for journalists.
- In 2010, Dimon made almost 10 times as much as the CEO of Gannett ( GCI ), Craig Dubow , who earned $4.5 million that year, according to GMI. Gannett, the largest newspaper company in the country, publishes USA Today. (Dubow has since resigned as CEO.)
Presumably, Dimon was able to make so much in 2010 at least in part because taxpayers handed JPMorgan Chase a $25 billion bailout package during the dark days of the financial crisis. It's likely the money helped the bank survive the meltdown with less damage than it might otherwise have incurred.
In defense of Dimon, his bank has paid back the bailout money, at a $1.7 million profit to the government, according to ProPublica. And many analysts praise Dimon for navigating the crisis better than many CEOs at large banks, by keeping capital levels higher and avoiding excessive exposure to subprime loans and questionable mortgage-backed securities. "Jamie Dimon has a well-deserved reputation as one of the best bankers in the business," says Morningstar analyst Jim Sinegal.
How pay levels are set
His comment that journalists are "overpaid" was part of an analysis that newspapers pay out 42% of revenue in compensation, compared with the 35% paid out by his bank, which also happens to be a lot more profitable than the typical newspaper company.
But he overlooks the reality that pay for journalists, like pay for bank workers, is set in the marketplace. So presumably, what's "fair" pay is the amount determined by the free market. This is something any good capitalist, like the CEO of a major bank, should understand.
In contrast, excessive pay for CEOs is often the result of CEOs being too cozy with the boards who set their pay.
That's one of the worries that have sparked a national debate over the increasing wealth held by members of the upper stratosphere of the U.S. economy. Another is that this trend contributes to the hollowing-out of the middle class, which economists say hurts the economy.
"There are sectors and localities where journalists are pretty well paid, like New York and Washington, (D.C.)," says Rick Edmonds, who follows journalism business issues at the Poynter Institute in St. Petersburg, Fla.
Edmonds estimates, for example, that journalists at the Wall Street Journal and the New York Times get low six-figure annual salaries. "That doesn't necessarily allow you to live like a prince, but you can get by on that."
More importantly, he says, pay for journalists is set by market forces. "If the Washington Post said 'We are going to pay our top reporters $60,000 a year,' they wouldn't have top reporters for very long," says Edmonds.
Surely Dimon understands this. Because in the same shareholder meeting, he defended high pay on Wall Street, including at JPMorgan Chase, by saying it's necessary to get top talent. "We are going to pay competitively," he said. "We need top talent; you cannot run this business on second-rate talent."
Why should it be any different for journalists?
