Recent sweeping changes in tax rules have had many banks busy doling out celebratory raises and bonuses to thousands of employees lately — a move that could have ramifications for credit unions competing to attract and retain talent.
Many large banks are taking part in the bonus trend. Bank of America Corp., for instance, is reportedly giving out $1,000 bonuses to more than half its 210,000 employees. Winston-Salem, North Carolina-based BB&T, which has about $215 billion in assets, announced it was paying $1,200 bonuses to about 27,000 employees, and Cincinnati, Ohio-based Fifth Third Bancorp, which has about $140 billion in assets, said it plans to give more than 13,500 employees $1,000 bonuses as well.
Hourly wage increases and other perks are also coming for many bank employees. Wells Fargo, BB&T and Fifth Third, for instance, have all said they will increase their minimum wage to $15 an hour. PNC Financial Services Group, Inc., which announced it will give $1,000 bonuses to about 90% of its employees and raise its minimum wage to $15 an hour, said it will also put an extra $1,500 in employee pension accounts and donate $200 million to its foundation supporting early childhood education.
Some small and medium-size banks are upping their compensation packages as well. On December 26, Clinton, New Jersey-based Unity Bancorp, which has $1.3 billion in assets, announced $750 bonuses for all employees excluding executive management. Bank of Hawaii announced on December 22 that in addition to $1,000 bonuses for all employees below the senior vice president level, it will begin paying at least $15 an hour starting in January. (The state's minimum wage was $9.25 an hour in 2017 and $10.10 an hour in 2018.) The Honolulu-based bank had about $17 billion in assets as of September 30, according to the Federal Reserve.
CUNA Senior Economist Jordan van Rijn said the banking industry's shower of one-time bonuses probably won't make it harder for credit unions to find good employees. But the wage raises might.
"Permanent increases in salary relative to an equilibrium wage level may very well put pressure on credit unions to increase salaries in order to maintain or attract talent," van Rijn added.
"I don't think there's much doubt that credit unions do compete with banks for talent, for everything from a teller to a CEO. Many of the positions are quite interchangeable and experienced gained in one institution can be useful in the other," the economist explained.
"However, it's also important to keep in mind that credit union employees may be more likely to be motivated by a sense of purpose and mission — as is common in the not-for-profit industry. To the extent that this exists, credit union employees may be willing to receive a slightly lower salary than their counterparts at a bank," van Rijn noted. "Nonetheless, if this gap gets too big, it is likely that some would leave unless credit unions increase their salaries as well."
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