San Francisco-based international bank, Wells Fargo, Cincinnati-based Fifth Third Bancorp, and Phoenix-based, Western Alliance Bancorp, have announced on Wednesday they would raise the minimum-wage for their employees. The banks will use a part of the tax-overhaul windfall cash, made possible by a tax bill that was cleared by Congress on Wednesday.
Fifth Third Bancorp has said that it will pay almost 14 thousand of its employees a bonus and raise the low-tier pay of its workforce to $15 dollars an hour. The decision came just an hour after the Republican tax plan was passed.
Western Alliance will also follow suit after announcing its plans to increase its 401 k match from 50 percent of an employee’s contribution up to 6 percent of pay to 75 percent of an employee’s contribution up to the same percentage. In addition, the plan has stated that it would use the upcoming windfall cash to improve maternity leave benefits. Western Alliance operates units including Bank of Nevada and Torrey Pines Bank. They currently have a workforce of about 1.700 employees.
Wells Fargo announced similar changes to its salary scheme, saying that will raise its minimum wage for employees to $15 an hour. More so, the San-Francisco based bank states that it will allocate $400 million in donations to community and non-profit organization in 2018.
U.S. banks are known to pay relatively higher tax rates, something that will change once President Donald Trump signs the bill into law.
As for the other banks, it is unclear what they will do with the windfall money. Jason Goldberg, a Barclays PLC analyst, believes that the extra funds will initially fall into the banks’ bottom lines, however, some of the funds might end up on costly technology initiatives and employee wages. According to the analyst, higher profits would suggest increased dividends and share buybacks, something that would benefit bank shareholders.
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