Big banks have faced heated public criticism for paying chief executives multimillion-dollar salaries and flush bonuses since the financial crisis. But little attention has been paid to wages for workers at the other end of the industry's spectrum even as many tellers reportedly struggle to make ends meet.
The issue of bank teller pay is starting to attract public scrutiny. A report released late last year by the Committee for Better Banks, a coalition of community labor groups, made waves with the finding that almost a third of tellers and their families nationwide are on public assistance. With median pay for bank tellers hovering around $25,000 annually in 2012 and cost-conscious banks slashing tellers' hours or replacing them with ATMs, economists and labor advocates say it's hardly surprising these workers are having trouble paying the bills.
"Many, if not most, workers are facing this problem of low wages," says Brigid Flaherty, who works on the Committee for Better Banks as the organizing director of the labor group Alliance for a Greater New York. "We're hearing from a lot of bank tellers who are saying to themselves, 'This is not that far off from working at a McDonald's or a Walmart.'"
Indeed, meager pay for low-income workers is a phenomenon that's scarcely unique to banking, says Heidi Shierholz, an economist at the Economic Policy Institute. Since the 1970s, wages for low- and middle-income workers across industries have stagnated or fallen while wages in the high-income bracket have continued to climb, she says.
The income gap between bank CEOs and industry workers at the other end of the totem pole strikes some observers as particularly unfair. At a time when many lenders appear to have recovered from the financial crisis with higher profits than ever, the Committee for Better Bank's Flaherty argues that banks have little justification for keeping teller wages low while hiking pay for those at the top.
"We have to ask those who are running the banks why they feel they deserve to have such an excessive salary and bonus structure versus the workers who are doing everyday work to make banks run," Flaherty says. She points out that JPMorgan Chase (JPM) chief Jamie Dimon, who earned nearly $19 million in 2013, could earn the annual salary that a teller makes at his company $22,886 in two hours. Bank of America (BAC) head Brian Moynihan, who made about $13 million last year, would take four hours to rake in the $23,054 salary his company pays tellers.
"That's crazy and that's not unique," Flaherty says.
To compare executive and bank teller pay is to commit economic folly, says economist Michael Strain, a resident scholar at the American Enterprise Institute.
"Workers get paid based on their productivity," Strain says. "Relative to a cheaper alternative, bank tellers are less productive per dollar of compensation. It's an unfortunate reality, but that probably is a reasonable wage to pay them given how much cheaper it is to use an ATM."
Public assistance programs like the earned-income tax credit provide "a very good solution to the problem of low wages for a formerly middle-class occupation," Strain says. The earned-income credit is one of the four forms of public assistance that nearly a third of bank tellers are enrolled in, according to data provided to the Committee for Better Banks by the University of California-Berkeley Center for Labor Research and Education. (The other forms of assistance are food stamps, Medicaid and the Temporary Assistance for Needy Families cash-welfare program.)
State and federal governments pay nearly $900 million each year to support bank tellers on these programs, according to the study.
At least one bank CEO has taken a hard look at his own payment practices and decided to change the way he compensates workers. Trevor Burgess, president and chief executive of C1 Bank in St. Petersburg, Fla., announced in March that the $1.3 billion-asset bank would offer all full-time employees a minimum living wage of $14 an hour a change that largely impacted tellers.
"We've been so successful," Burgess told American Banker. "We need to make sure that everyone is benefiting from that success because they're contributing to it every day in the trenches."
No other banks appear have followed C1's lead as of yet. But in light of clothing retailer Gap's decision this year to raise minimum pay for workers and the U.S. Senate's recently defeated proposal to raise the federal minimum wage to $10.10, the issue of bank teller pay appears likely to continue playing a part in the broader national conversation about low-wage workers.
"To raise the level of wages so people can have a good life is a big success and something that's a model for what other banks should be following," Flaherty says.