Will raising the minimum wage leave a positive or negative impact? Many opinions differ - read how minimum wage may (or may not) be the right move.
By Greg Carmichael, Chairman, President and CEO, Fifth Third Bancorp
For the past decade, the federal minimum wage has been $7.25 per hour. While politicians and advocacy groups debate about an increase, the market has moved forward. So, too, has Fifth Third Bank. We raised our minimum wage to $18 per hour on Oct. 28, and it was the second increase we made in under two years. The reason is simple: It’s the right thing to do.
I can’t speak directly to the dynamics of other organizations, but taking this action made sense for Fifth Third, and from multiple angles. Increasing the minimum wage enables us to lower turnover, improve employee engagement and provide best-in-class customer service. It supports our reputation and reinforces the value of the partnerships we have established to strengthen our communities. Stronger communities, in turn, build a stronger bank.
In January 2018, we raised our minimum wage from $12 to $15 an hour and the results have been compelling. Higher wages plus innovative new benefits such as parental bonding leave and our maternity concierge program have enabled us to attract and retain talent. Year-over-year turnover in jobs most affected by the minimum wage, including roles in banking centers and call centers, dropped 16% in 2018.
Beyond the potential long-term professional gain to employees from this investment, there’s also an immediate financial gain. Nearly 25% of our 20,000 employees benefit from the increase. The new minimum annual salary of $37,440 for full-time employees means an extra $500 a month before taxes. In Cincinnati and across our 10-state footprint, that amount can make a real difference in an employee’s life and financial security. In addition, employees who are better compensated bring more wealth to their communities, helping make them more vibrant.
It’s clear that for Fifth Third, raising the minimum wage has delivered wins for shareholders, for customers, for communities and for employees.
Those wins are real and personal, as evidenced by the many comments I’ve heard from managers and employees. One is buying a more reliable car with his pay increase; another told me he is moving his family into a bigger apartment. Another employee, Lexus Smith, started at the bank in 2017 at $12 an hour working as a dispute resolutions specialist in in customer service. Her hourly wage went up to $15 an hour with 2018 increase, and Lexus – now a teller – will move to $18 an hour with this latest increase. She is a single mom with two young children, and she said the wage increase will be life-changing.
“The pay increase is helping me start a college fund for my little girl and my little boy,” Lexus said. “I can take care of them and plan for their future.”
That’s more than life-changing; it’s generation-changing.
The plans that Lexus shared speak volumes about the impact of our decision to raise the minimum wage. They tell us that the increase will make a lasting, positive difference both in the lives of our employees and in the well-being of our communities. They affirm for us, once again, that raising the minimum wage was the right thing to do.
Greg Carmichael is chairman, president and CEO of Fifth Third Bancorp.