DIMON: 'We are creating generations of citizens who will never have a chance'

JPMorgan chief executive Jamie Dimon is worried about labour force participation.

Dimon just published his annual shareholder letter, setting out his thoughts on JPMorgan’s strategy as well as broader issues of regulation and public policy. Included in the 46-page report was a section on labour force participation and education.

Dimon said he was concerned about the labour participation rate, particularly for men in their prime working years, between the ages of 25 and 54. He highlighted the role of education in this problem, saying that “many high schools and vocational schools do not provide the education our students need.”

His comments can be summarized as follows:

  • The labour participation rate for men between 25 and 54 has gone from 96% in 1968 to a little over 88% today. “This is way below labour force participation in almost every other developed nation,” Dimon said.
  • “If the work participation rate for this group went back to just 93% — the current average for the other developed nations — approximately 10 million more people would be working in the United States.”
  • “Fifty-seven per cent of these non-working males are on disability, and fully 71% of today’s youth (ages 17 — 24) are ineligible for the military due to a lack of proper education (basic reading or writing skills) or health issues (often obesity or diabetes).”
  • “We should be ringing the national alarm bell that inner city schools are failing our children — often minorities and children from lower income households. In many inner city schools, fewer than 60% of students graduate, and many of those who do graduate are not prepared for employment.”

Here are the full extracts on labour force participation and education:

“Labour force participation in the United States has gone from 66% to 63% between 2008 and today. Some of the reasons for this decline are understandable and aren’t too worrisome — for example, an ageing population. But if you examine the data more closely and focus just on labour force participation for one key segment; i.e., men ages 25-54, you’ll see that we have a serious problem. The chart below shows that in America, the participation rate for that cohort has gone from 96% in 1968 to a little over 88% today. This is way below labour force participation in almost every other developed nation.

“If the work participation rate for this group went back to just 93% — the current average for the other developed nations — approximately 10 million more people would be working in the United States. Some other highly disturbing facts include: Fifty-seven per cent of these non-working males are on disability, and fully 71% of today’s youth (ages 17 — 24) are ineligible for the military due to a lack of proper education (basic reading or writing skills) or health issues (often obesity or diabetes).”

And:

“Many high schools and vocational schools do not provide the education our students need — the goal should be to graduate and get a decent job. We should be ringing the national alarm bell that inner city schools are failing our children — often minorities and children from lower income households. In many inner city schools, fewer than 60% of students graduate, and many of those who do graduate are not prepared for employment. We are creating generations of citizens who will never have a chance in this land of dreams and opportunity. Unfortunately, it’s self-perpetuating, and we all pay the price. The subpar academic outcomes of America’s minority and low-income children resulted in yearly GDP losses of trillions of dollars, according to McKinsey & Company.”

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