A $25 Minimum Wage
With one bold move, Bank of America Corp. gained an edge in the war for talent — and set another benchmark for environmental, social and governance reporting.
Last month, the megabank announced that it’s raising its minimum wage to $25 an hour by 2025; it previously raised its minimum wage to $20 an hour last year. That’s not the highest minimum wage — First Republic Bank, based in costly San Francisco, pays at least $30 in all its markets. But it’s well above the roughly $16 median hourly wage earned by a bank teller, according to the Bureau of Labor Statistics. And it outpaces the starting pay shelled out by its big bank rivals. JPMorgan Chase & Co. pays $16 to $20 an hour, based on geographic market, and Wells Fargo & Co. pays $15 to $20 an hour, according to their respective ESG reports.
Banks looking to hire will be hard pressed to get anyone in the door for less, says Jeff Fairchild, director of compensation consulting at Newcleus Compensation Advisors. “I’ve had one client say, ‘we can’t even get anybody to come for an interview for less than $20 an hour.’ … For some, it’s $15.”
Bank Director’s 2021 Compensation Survey, sponsored by Newcleus, explores rising stakes in the industry’s war for talent, with banks struggling to fill various positions, from technology and lending to entry-level staff. The smallest institutions in particular tell us they can’t effectively compete.
One CEO of an Oregon-based community bank says that the bank’s greatest compensation challenge is attracting people for entry-level positions. “We have had to deploy an in-house minimum wage of $15 [an] hour to attract and retain these people,” he writes. Little wonder that managing compensation and benefit costs remains a top compensation challenge.
But Bank of America appears to be willing and able to pay more to attract talent to its team.
Even vendors must comply. Along with the pay hike for its own staff, the bank expects its U.S. suppliers — more than 2,000 companies employing 43,000 workers — to pay at least $15 an hour to employees working directly with the bank. Some vendors already paid this minimum rate; Bank of America has been working to get the rest on board.
It’s not unusual for large companies to ensure that their suppliers align with their ESG goals — around environmental sustainability or diversity & inclusion, for example — but Bank of America seems to be the first mover among the big banks in setting a minimum wage for vendors.
As investors and other stakeholders increasingly look for companies to ramp up their ESG disclosures, it remains to be seen if other organizations will follow the banking giant’s example.
• Emily McCormick, vice president of research