Bank of America said Tuesday that it would raise its minimum wage to $20 an hour by 2021, a move that comes a day before banking industry leaders are scheduled to be grilled on Capitol Hill in Washington on their record profits a decade after the financial crisis.
The pay increase will affect all of the Charlotte-based bank’s more than 200,000 employees, the bank said.
Bank of America’s announcement comes as Democratic lawmakers push legislation to raise the federal minimum wage from the current $7.25 to $15 per hour by 2024 amid a tight labor market. Workers are receiving the largest wage increases since the Great Recession as employers struggle to find enough people to fill their ranks.
“The job market is very healthy, and this is one way to help employee retention,” said Ken Leon, director of equity research at CFRA Research, said of Bank of America’s announcement.
The bank said it began raising its minimum wage two years ago, first to $15 an hour. It is scheduled to reach $17 an hour in May and then increase incrementally until it hits $20 an hour. “We are raising our minimum wage because we believe that to best serve our customers and clients, we need the best teams,” Sheri Bronstein, the bank’s chief human resources officer, said in a statement.
Wages at big banks began nudging up a few years ago as industry profits reached their highest levels since the financial crisis. Earlier this year, JPMorgan Chase announced that it would be raising its minimum wage to between $15 and $18 an hour for 22,000 employees. Wells Fargo raised its minimum wage to $15 an hour.
Bank of America’s announcement also comes a day before its chief executive, Brian Moynihan, is scheduled to appear before the House Financial Services Committee along with the leaders of six other big financial institutions – JPMorgan Chase, Morgan Stanley, Goldman Sachs, Citigroup, State Street, and Bank of New York Mellon. The executives are expected to be questioned by House Democrats about the safety of the financial system, whether big banks should be broken up and their financing of private prisons and gun manufacturers.
The CEOs are also expected to face tough questions about the Trump administration’s efforts to roll back financial regulations despite record industry profits. Bank of America, for example, reported a profit of $28 billion last year and increased the dividends it paid to shareholders. Moynihan made $26.5 million in 2018, a 15 percent increase from the previous year, and a record for the company.
The industry has defended its track record, saying banks are financially healthier and better run than before the financial crisis. “The financial crisis was an incredibly difficult period for our country and our firm,” Goldman Sachs CEO David Solomon is scheduled to tell the committee, according to his prepared testimony. Because of financial reform, “today the U.S. financial system is substantially safer and more resilient against failure or disruptions.”