More Banks Are Getting Dragged Into Minimum Wage Debate
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The banking industry, which has long faced criticism for its executive pay practices, is getting more attention for how it compensates its lowest-paid workers, as more banks take a stand on the issue of minimum wage.
Two institutions — C1 Financial in St. Petersburg, Fla., and Amalgamated Bank in New York —have raised their minimum wage to $15, an amount in line with a national labor campaign. Other banks have been legally required to raise employee pay as more municipalities take a stand on the issue.
The shift has thrown some bankers into a broader debate over how to address pay for positions such as tellers and other support staff. Executives’ opinions are mixed, illustrating a desire to help employees meet basic expenses — and a concern about the broader economic tradeoffs.
"The country has become very awakened to the issue of income inequality," said Keith Mestrich, chief executive at the $3.7 billion-asset Amalgamated. "The economic recovery has not been shared, and I think people are realizing that."
The union-owned bank made headlines in August when it raised its minimum wage, and then challenged other banks to do the same.
Other banks, such as Washington Federal in Seattle, were forced to raise wages to comply with a new city laws. Seattle recently implemented a law that requires companies to gradually increase wages over the next two to three years until they reach $15.
"We believe that the new minimum wage law in Seattle will not have a material financial impact on Washington Federal, however we are concerned about the ability of service companies, such as restaurants, to pass along the cost," Lisa King, a senior vice president at the $14.3 billion-asset company, wrote in an email, adding that the law could also discourage companies from adding new jobs.
The recent focus on wage floors comes as labor groups have scored political victories in other cities.
The federal minimum wage has also become a focal point in the presidential campaign. Democratic candidates have Bernie Sanders and Hillary Clinton back a $15 wage, while several Republican candidates are expressing concerns about an increase above the current level of $7.25.
As the issue has gained steam, the banking industry has been a target for activist groups.
Most banks offer generous compensation packages for top executives, critics say, while asserting that boosting wages — either voluntarily or under a municipal ordinance — has little impact on the bottom line.
"Fair wages is one of our main demands," said Renata Pumarol, an activist with the Committee for Better Banks, which has organized protests this year on issues ranging from teller pay to workplace stress.
Nearly a third of retail banking employees have jobs with a median hourly wage below $15, according to an August report from the National Employment Law Project, a union-affiliated group in New York. Average pay for bank tellers is $12.81 per hour, according to May 2014 data from the Bureau of Labor Statistics.
"As the movement around raising wages has picked up pace, I think the banking industry has been largely overlooked," said Irene Tung, senior policy researcher with the National Employment Law Project.
C1 Financial last year adopted a "living wage" policy for bank employees, requiring minimum pay of $14 an hour. The $1.6 billion-asset bank recently raised that amount to $15—a change that benefited 30 of its 247 employees, the company said in a July post on its Facebook page.
Bigger banks have also come under scrutiny. A story last week in the Seattle Times profiled the struggles faced by a Seattle security guard at KeyCorp, who earns $11.50 an hour and spends several hours per day commuting to two jobs.
A spokesman for the $92 billion-asset Key, which is based in Cleveland, declined to comment.
As executives take a fresh look at compensation for tellers and other lower-wage posts, some say that, overall, it’s not a pressing issue for the banking industry.
"Generally speaking, banks tend to offer their employees more generous compensation levels than a minimum wage, so a minimum wage increase wouldn’t necessarily have a large-scale impact on our industry," Beth Mills, a spokeswoman for the California Bankers Association, wrote in an email.
The median wage for tellers in California is $13.75 an hour, according to the Bureau of Labor Statistics.
Still, Mills said her association is paying attention to the issue as more cities in the state have hiked the minimum wage.
While Washington Federal is "skeptical" about the outcomes associated with a $15 minimum wage policy, King said the company is proud to be part of a broader effort to assist low-wage employees.
"It’s great to live in a city that’s willing to experiment and take risks to at least try to solve some of our society’s most pressing problems," King said.