CNBC: The tortured truth behind Wells Fargo's 'Trump tax cut' minimum wage raise

By Eric Rosenbaum
CNBC, Dec 23, 2017

Let's make one thing clear: It's hard to beat "Show me the money." More money going to American workers in the form of bonuses and higher wages for the lowest-paid on the labor ladder are good things — minimum wage increases, in particular. Unlike the individual tax cuts that are set to expire in less than a decade and one-time bonuses, a wage increase is more money in the worker's pocket that's not going away. ...

A skeptic doesn't need to be a political partisan to wonder about the Wells Fargo claim that the tax cuts made all the difference. ...

1. If the tax cuts were the reason that Wells Fargo raised its minimum wage, that means the bank's management was able to read and absorb a 1,500-page document that only became available in the past few days and has multiple issues that can help or hurt banks within it, and reach a definitive conclusion to quickly raise wages across the country.

"There would be too many things moving around that affected banks for them to act this quickly," said Keith Mestrich, president and CEO of Amalgamated Bank, which raised its minimum wage to $15 in 2015. ... "These were plans in the works, and, again, it is great for workers, and that's a good headline," he said.

2. In fact, the plans were not only in the works but previously announced plans by Wells Fargo meant some minimum-wage workers were already receiving more than $15.

Early in 2017 the bank said it was raising its minimum wage to a range of $13.50 to $17. And there's a good reason some of the bank's lowest paid are already making $15 or more. Amalgamated Bank isn't the only one in the banking industry already ahead of Wells Fargo on wages. J.P. Morgan said more than a year ago that 90 percent of the employees affected by a new minimum wage policy would see an increase to between $13.50 and $16.50. Workers in major cities would see a minimum of $15, more in some cities. Bank of America raised its minimum to $15 in December 2016.

"There's no way this was just done as a result of the tax bill getting passed," Mestrich said. "I'm glad they are doing it, but the market for talent is tightening. We've been seeing a bit of wage demand across the board at all levels of banking, and I can't imagine we're the only bank." ...

"We're glad to see Wells Fargo ... following in the footsteps of companies like Amalgamated Bank and C1 Bank, which raised starting pay to $15 in 2015 without tying it to top-heavy tax cuts," said Alissa Barron-Menza, vice president of advocacy group Business for a Fair Minimum Wage. ...

3. The overall environment for banks is a good one, with interest rates likely to continue to rise, and that would have been a boon to bank profits regardless of tax cuts.

"Banks should do well next year and want to keep staff," Mestrich said. That's because the Federal Reserve has clearly indicated a continued desire to raise interest rates and most banks have "interest rate sensitive assets," meaning they will do well with rising rates.

Mestrich said the impact to Amalgamated financials was not substantial as a result of the $15 minimum wage and it will get even more modest with interest rates going up, as that creates an increase in the bank bottom line.

4. Many of the worker complaints related to the predatory sales and fake account allegations that still surround Wells Fargo attribute the pressures workers faced to wages that were so low it compelled them to take questionable steps to open more accounts. ...

Read more

Copyright 2017 CNBC



Share +