Bank of America increases minimum wage to $21 as labor shortages push up compensation
With employees getting paid $21 per hour, their annualized salary comes out to $43,680.
In May, the company announced that all of its U.S. vendors were required to pay their employees dedicated to the bank at or above $15 per hour.
The change comes in the midst of labor shortages taking place all over the United States, as companies struggle to hire and retain employees, especially for lower wage jobs.
The increase would put Bank of America at roughly three times the U.S. minimum wage of $7.25 per hour. However, several states have a minimum wage in excess of $12 an hour.
►Bank of America's minimum wage commitment: Bank of America to boost minimum wage to $25 an hour for its employees by 2025
It also places Bank of America ahead of many of its competitors.
JPMorgan Chase & Co, the largest bank in the U.S., increased its minimum wage to between $16.50 and $20 an hour in 2019.
Citigroup, the fourth-largest U.S. lender, increased it to $15 an hour in 2019.
Wells Fargo said in 2020 it would make its minimum wage between $15 to $20 per hour, but not for all parts of itsU.S. labor force.
Banking automation on the horizon?
While wages are increasing in the banking industry, Wells Fargo recently released a report predicting that automation will cut 100,000 bank jobs across the country in the next few years, according to Bloomberg,
In an interview with Bloomberg, Mike Mayo, Wells Fargo Managing Director, said: "Tech should enable banks to become more efficient than they've ever been before in history, and that's for modernizing back office branches and call centers."
Mayo predicts the jobs lost will be coupled with an increased investment in financial advisors as well as technologists in fields like artificial intelligence, machine learning, big data, cloud computing and digital banking.
►Automation amid the pandemic: Do we need humans for that job? Automation booms after COVID
Technology investments have been paying off for banks, especially during the pandemic.
Bank of America, in its 2021 second quarter earnings presentation, reported a record of 40.5 million digital users, up 1.2 million year-over-year.
Bank of America noted in a February 2021 press release that 70% of its clients were engaging digitally for more of their financial needs, and digital channels became the primary method for clients to access banking needs.
Bank of America's virtual assistant "Erica" became core to serving clients, with around 7 million customers using Erica for the first time last year. Launched in June 2018, Bank of America’s AI-driven virtual financial assistant now has more than 17 million total users and has helped clients with more than 230 million requests.
Bank of America declined to comment whether the wage increase was a signal of layoffs and increased automation and digital investment.
In the past few years, however, Bank of America's workforce has been steadily increasing with single digit percentage growth since 2016, according to Macrotrends.
At the same time, Bank of America has continuously raised its minimum hourly wage from $15 in 2017, to $17 in 2017, and to $20 in 2020, with another $1 increase this year.