Last Tuesday, Bank of America announced it will raise its minimum hourly wage to $25 by the year 2025. Previously, Bank of America raised its minimum to $20 per hour.
In addition, the company required its vendor to pay workers assigned to BofA a minimum of $15 per hour. This requirement covers more than 2,000 vendor firms and 43,000 vendor employees.
However, bank officials say that 99% of vendors now pay their workers $15 an hour minimum.
Bank Of America’s $20 Minimum Hourly Wage
Previously, banks and other employers with large retail workforces received constant criticism over low wages.
While Wall Street executives are famous for making millions of dollars a year, bank tellers and other support staff receive far less pay.
In fact, about one-third of bank tellers receive aid in the form of public assistance, including food stamps and Medicaid. This is according to a 2013 report from The Committee for Better Banks.
Bank of America, run by CEO Brian Moynihan since 2010, is a pioneer in pushing the industry’s compensation rates.
In 2019, the megabank announced its guarantee of a $20 per hour minimum wage for its employees. By 2020, the bank managed to make that minimum rate institutionalized.
Sheri Bronstein, BofA head of human resources, talked about investing in their people. “A core tenet of responsible growth is our commitment to being a great place to work which means investing in the people who serve our clients.
That includes providing strong pay and competitive benefits to help them and their families so that we continue to attract and retain the best talent,” she said.
“It costs us a few hundred million dollars a year,” Moynihan said. “But it’s an investment,” adding that the increase is about maintaining a great standard of living for our BofA employees.
Paying more also helps give employees a “career mindset” and ultimately breeds loyalty, he added. In turn, that’s how shareholders get paid back.
“The key is for big companies like ours to set a standard. We think it’s part of sharing our success with our communities,” Moynihan added.
Bank Of America’s New Wage Rates
With the adjustment, Bank Of America workers will receive a sizable upgrade in their take-home pay. Working at $25 an hour brings a full-time employee compensation to $52,000 annually.
This represents a 25% increase from their previous minimum wage of $41,600 a year. In addition, the company’s minimum wage will be more than three times higher than the federal minimum wage of $7.25 an hour.
Meanwhile, the nonpartisan Congressional Budget Office reported in February that boosting the minimum wage to $15 per hour will rescue 900,000 people from poverty.
The federal government hopes to standardize the $15 minimum wage by 2025. If it succeeds by then, the Congressional Budget Office will likely lose about 1.4 million jobs for Americans.
Higher wages will increase the cost of producing goods and services. As a result, companies might cut down on their staffing requirements to avoid increasing prices.
Watch the Bloomberg Markets and Finance video reporting that Bank of America will raise the minimum wage to $25 an hour:
Do you support BofA’s decision to raise its minimum wage to $25 per hour? Also, do you expect other banks to follow?
Let us know what you think about the $25 minimum wage rate. Share your comments in the comment section below.