Wage inflation has arrived in a big way and Jamie Dimon says CEOs ‘shouldn’t be crying’.

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Banks have been one of the main beneficiaries of high inflation lately because their profit margins tend to widen when higher prices force central banks to raise interest rates.

At least, that’s what investors thought as investors bid up bank stocks as interest rates rose and inflation hit multi-decade highs. Now, megabanks like JPMorgan Chase and Citigroup are announcing that hot inflation in one area – employee wages – is casting a shadow over the next few years.

JPMorgan shares fell more than 6% on Friday after the bank said spending will rise 8% this year to about $77 billion, on the back of wage inflation and technology spending. Higher spending is likely to push the bank’s yields below recent results and the lender’s 17% return-on-investment target in 2022 and 2023, according to CFO Jeremy Barnum.

“We’ve seen a bit of increased turnover and a very dynamic job market, as seen by the rest of the economy,” Barnum said. “It is true that labor markets are tight, that there is slight wage inflation and it is important for us to attract and retain the best talent and pay competitively.”

The development adds nuance to the bullish case for owning banks, which typically outperform other sectors in rising-rate environments. While economists expect the Federal Reserve to hike interest rates three or four times this year to boost the financial industry, Barnum says there is a risk that runaway inflation could actually erase those gains.

“All things considered, moderate inflation leading to higher interest rates is good for us,” the CFO told analysts on a conference call. “But in some scenarios, increased inflationary pressures on spending could more than offset the interest rate advantage.”

Mark Mason, chief financial officer of Citigroup, said on Friday that there is “a lot of competitive pressure on wages” as banks scramble for talent amid the boom in deals and trading activity.

“We’ve seen some pressure on what to pay to attract talent,” Mason said. “You’ve seen it even at some of the lower, I should say entry-level levels in the organization.”

At JPMorgan, the largest US bank by assets, it’s primarily the bank’s professional class — traders, investment bankers and wealth managers — who have seen salaries rise after two straight years of strong performance. The company also raised wages at its stores last year.

“There’s a lot more compensation for top bankers, traders and executives who I should say have done exceptional work over the last few years,” chairman and CEO Jamie Dimon told analysts during a conference call. “We will be competitive on pay. If that eats into margins for shareholders a little bit, so be it.”

Dimon said while headline inflation will “hopefully” decline this year as the Fed gets to work, increases in “wages, housing and oil are not temporary but will stay high for a while.”

In fact, Dimon told analysts that wage inflation would be a recurring theme among companies this year. Some companies will handle the change better than others, he said.

“Please don’t say I’m complaining about wages; I think that wages are going up is a good thing for the people who are making wages go up,” Dimon said. “CEOs shouldn’t be crybabies. You should just deal with it. The task is to serve your customers as best as possible with all the factors that are there.”