Able, But Not Willing

Non-Sufficient Funds Poverty Wages and Racial Inequality at

the Twin Cities largest banks

A Report by: 15 Now Communication Workers of America (CWA Neighborhoods Organizing for Change (NOC) Minnesotans for a Fair Economy Service Employees International Union (SEIU), Local 26

September 2015

Contents

Summary and Introduction ............................................................................. 4

The Banking Industry and Poverty Wages ..................................................... 6

Racial Inequity in the Workforce ..................................................................... 7

US Bank and Wells Fargo .............................................................................. 9

Direct Employees .................................................................................................................................... 9 Wages ....................................................................................................................................................................... 9 Paid Sick Leave ........................................................................................................................................................ 10

Subcontracted Employees .................................................................................................................... 10

The Need for $15 ......................................................................................... 12

About Us ....................................................................................................... 13

Endnotes ...................................................................................................... 14

Non-Sufficient Funds Page 4

Tellers at US Bank are

paid an average of

$11.60/ hour. Wells

Fargo pays its tellers

only slightly better, an

average of $11.81.

Summary and Introduction

"We think it's the right thing for our bank to do, and frankly we think

it's the right thing for all banks to do . . . If any industry in this

country can afford to set a new minimum for its workers, it's the

banking industry."

- CEO and President of Amalgamated Bank Keith Mestrich announcing

that all of the bank's employees will be making at least $15 an hour.1

-------------------------------------------------------------------------------------------------------------------------

There is a big difference between perception and reality in the banking industry. It may seem that because bank workers wear business attire, that they are paid as handsomely as they dress. However, the median wage for a bank teller in the Twin Cities is less than $12/hour.

Tellers at US Bank are paid an average of $11.60, which means that even if they work forty hours a week, they will still be below the poverty line.2

These low wages primarily impact women, who account for more than five in six bank tellers in the Twin Cities.3

The result of this low pay is that almost a third (31%) of bank tellers nationally must rely on public assistance for themselves or their families in order to get by, at a cost to taxpayers of almost $900 million a year.4

While Twin Cities bank executives push for lower taxes on corporations and the wealthiest Minnesotans and reward themselves with compensation packages worth tens of millions of dollars, the public is forced to subsidize the poverty wages banks pay to many of their employees. US Bank CEO Richard Davis received total compensation of $19.4 million last year and Wells Fargo CEO John Stumpf received $21.4 million, which means that they were each paid more in three hours than a full-time teller is paid in a whole year.5

Non-Sufficient Funds Page 5

It may also appear that banks have diverse workforces based on the diversity of employees in bank branches..

However, there is a two-tiered labor force in the banking industry. White employees dominate upper management and higher-paying jobs, despite large increases in the number of people of color with advanced education and experience and despite highly-touted programs to increase diversity. Meanwhile, people of color remain trapped in the lowest paying jobs.

In the Twin Cities, people of color make up 21% of the area's bank tellers but 7% or less of the bank jobs that pay over $30/hour.6

The number of teller jobs -- the jobs held by people of color -- is shrinking, while the number of well-paying positions -- the ones held primarily by white employees -- is increasing.

We need to make bank worker's reality match the public's perception.

Banks need to commit to greater diversity as a priority at all levels of the organization. The industry needs to both recruit qualified people of color from outside the financial institution and assist current employees of color to attain the education and training necessary to advance in the company.

US Bank and Wells Fargo should follow the lead of Amalgamated Bank and commit to pay their employees at least $15 an hour. As two of the largest employers in Minnesota they should guarantee that their workers have adequate paid time off to care for themselves or their families and have fair workweek scheduling with access to full-time hours and without last minute scheduling changes.

The Minneapolis City Council is currently considering a set of policies to address these issues and to raise standards for working families by ensuring sick and safe time and a fair work week, putting an end to wage theft, and raising the minimum wage. Wells Fargo and US Bank should support these policies and use their leadership role in local business trade groups to ensure that those groups do not obstruct or derail these policies that will dramatically improve conditions for workers in Minneapolis.

Non-Sufficient Funds Page 6

Nearly one-third of the families of bank tellers are

enrolled in one or more public assistance programs.

The Banking Industry and Poverty Wages

A recent report by the National Employment Law Project (NELP) examined wage levels in the banking industry.7 The report found that:

Almost one in three people working in the U.S. retail banking industry (30.4 percent) are in occupations with median hourly wages below $15.

The largest occupation in banking is a teller, representing almost half a million workers in the U.S. and more than a quarter of all retail banking employees.

Almost three-quarters (74.1 percent) of bank tellers in the U.S. earn less than $15 per hour. Almost half of bank customer service representatives (44.2 percent) earn less than $15 per hour.

According to the report, the median hourly wage for bank tellers nationally is $12.44. The median wage for bank tellers in the Twin Cities is almost fifty cents lower at $11.98.8

Bank tellers have seen the real value of their paychecks decrease as their wages have not kept up with the rising cost of living. The total compensation for an experienced bank teller is 3.8% less than it was in 2002, after adjusting for inflation.9

Nationally, nearly one-third (31 percent) of the families of bank tellers are enrolled in one or more public assistance programs, compared to 25 percent of the workforce as a whole, meaning that bank tellers and their families are more likely than working families in general to be enrolled in public assistance programs. The cost of public benefits to bank tellers and their families is nearly $900 million a year.10 These low wages primarily impact women, who overwhelmingly make up the bank teller workforce. In Minnesota as well as nationally, more than five in six bank tellers are women.11

Non-Sufficient Funds Page 7

Racial Inequity in the Workforce The Twin Cities metro area has had one of the worst racial employment gaps in the country. African-Americans and Native Americans are three times more likely than whites to be unemployed.12 There are also large racial disparities in the Twin Cities area's poverty rates, with people of color having much higher rates in Minnesota than they do nationally. One in 12 white metro area residents lives below the poverty line, compared to one in three African-American residents and one in four Latino residents.13 Minnesota banks are in a unique position to address these issues. Last year the NACCP released its "Opportunity and Diversity Report Card" on the Consumer Banking Industry.14 According to the report, there are expected to be 1 million jobs added to the financial services sector from 2010 to 2020. While there may be a larger number of jobs added in other sectors,

the banking jobs are expected to be higher paying than those in other sectors. Many of the projected bank job openings in the Twin Cities area will be for occupations with median annual salaries between $40,000 - $80,000. However, as the report noted, there is currently a two-tiered labor force in the banking industry with white employees dominating management and higher-paying jobs, while people of color are stuck at lower-paying positions. This has remained true despite dramatic increases in the number of highly educated people of color entering the workforce over the past 20 years and banks’ highly touted programs to increase diversity. As shown below, people of color, who hold 16% of all positions in the Twin Cities area, are underrepresented in these higher paying bank jobs, but overrepresented in lower paying bank jobs. People of color hold 21% of the teller jobs in the metro area.15

Occupation

Twin Cities Metro Area Median Pay

Percentage of positions in Twin Cities metro held by

people of color Hourly Annually at

Full-time Total Work Force in all Occupations $19.78 $41,142 15.7%

Bank Tellers $11.98 $24,918 20.9%

Credit Authorizers, Checkers, and Clerks $22.30 $46,400 7.6%

Real Estate Appraisers $27.68 $57,600 7.3%

Compliance Officer $33.14 $68,900 7.1%

Personal Financial Advisors $35.75 $74,400 6.7%

Financial Examiners $39.89 $83,000 5.9%

Non-Sufficient Funds Page 8

The projected growth in good paying

jobs puts banks in a position to be able to help bridge the racial jobs gap and close the racial economic divide. As two of the largest employers, Wells Fargo and US Bank in particular can play an important role in addressing these issues.

Wells Fargo has over 20,000 employees in Minnesota, making it the third largest private sector employer, just behind Target and Wal-Mart.16

US Bank is the fifth largest private sector employer in Minnesota, with 12,000 workers.17

The jobs that have had the greatest diversity, such as tellers, are sliding into obsolescence as customers are handling more transactions online or via ATM. These entry level positions had been a path to move up to somewhat better paying jobs within the bank branch. The elimination of these jobs will greatly impact the overall diversity of a bank's workforce. Banks should assist current employees to gain the education and training necessary to advance in the

At US Bank People of color make up 33% of the tellers, clerical, sales and service jobs at US Bank nationally but just 7.5% of the executive and senior manager positions.18 African-Americans and Latinos each make up twelve percent of tellers, clerical, sales, and service jobs, but less than two percent of the executive and senior managers.19

US Bank received an overall grade of D+ in the NAACP report, the lowest of the five banks that were reviewed. The report specifically cited that US Bank lagged far behind the other banks in the number of African-Americans and people of color in top and middle management positions.

company. The NAACP report also examined the banks' supplier diversity. Both US Bank and Wells Fargo received failing grades since less than 1% of their supplier budgets was spent on African-American suppliers, and less than 4% was spent on firms owned by people of color. The report contained specific recommendations for increasing diversity in

banks' top management and among its suppliers. These include:

Seeking out and interviewing at

least two qualified people of color for positions at vice president level or above and for all supplier contracts. For qualified individuals and suppliers who might otherwise be skipped over, this gives them a chance to prove their value.

US Bank Workforce Demographics

Position African-

American Latino

Executive/ Senior Managers

1.1% 1.9%

First/ Mid Managers 4.7% 6.9%

Professionals 5.6% 3.3%

Tellers, sales, clerical, service

11.6% 11.6%

Non-Sufficient Funds Page 9

Wells Fargo CEO John Stumpf (l) and US Bank CEO Richard Davis (r) each received over $19 million in compensation last year, which means that they each made more in 3 hours than a full-time teller makes in a year.

Recruiting qualified people of color from outside the bank. Many banks have a culture of only promoting from within the existing organization and requiring extended years of service at the bank to be eligible.

Adding flexibility to their procurement system in order to break orders into smaller increments and facilitate participation from

smaller businesses, which will especially help businesses owned by people of color.

Developing a timeline for achieving diversity with specific goals and holding all levels of the bank accountable for meeting those goals.

US Bank and Wells Fargo

Minnesota banking is dominated by US Bank and Wells Fargo, who hold a combined 70% of all deposits in the state (The third largest bank in Minnesota, TCF, has just 2% of deposits in the state).20

Direct Employees Wages

US Bank and Wells Fargo have a combined total of at least 1,700 tellers working in Minnesota.21 The median hourly wage for tellers in the Twin Cities is $11.98, but wages for tellers at US Bank and Wells Fargo are even lower.

Wells Fargo pays tellers an average of $11.81/hour.22 At US Bank the average teller is paid $11.60.23

US Bank CEO Richard Davis received $19.4 million in total compensation in 2014, and Wells Fargo CEO John Stumpf received $21.4 million, which means that they each made more in 3 hours than a full-time teller makes in a whole year.24 Davis' compensation was almost double what he received the previous year.25

Non-Sufficient Funds Page 10

Direct Employees Paid Sick Leave According to US Bank, employees can receive up to six paid sick days a year. However, employees report they are discouraged from actually using these days when they are sick, and that it is counted against them in their reviews if they do call in sick, and it also counts against them if they need to be out more than six days a year. Employees state that US Bank prefers that paid sick days be used for doctor's appointments, which can be scheduled in advance.

Subcontracted Employees

The janitorial and security services are subcontracted at US Bank and Wells Fargo offices, operations centers, and branches. The janitors and security officers earn between $12.15 - $14.62/hour and have

minimal paid sick leave. There is a maximum of three paid sick days and that is only after they have been on the job for at least five years.

Number of Paid Sick Days/Year

Years of employment required for full-time subcontracted worker at US Bank and Wells Fargo to receive paid sick days

Janitors

Security Officers

One After first year N/A

Two After three years After three years

Three After five years After five years

"I clean the offices of CEO Richard Davis and other US Bank executives. I have damage to my tendons and ligaments from standing and walking all the time for my job. Sometimes the pain is so bad that I need to take a day to let my feet and legs recover, but I can't afford to miss work. This makes the pain even worse, and by the weekend I can barely stand" - Rosalina Gomez

Non-Sufficient Funds Page 11

The situation is even worse at the US Bank Center in St. Paul, where the cleaning contractor, ROC, uses sub-contractors. ROC's operating model is to use subcontractors who hire janitors as "independent contractors." This type of arrangement has come under increased scrutiny by the U.S. Department of Labor, which stated that the mis-classification of employees as "independent contractors" is a serious problem since workers are often denied critical benefits and protections they are entitled to, such as family and medical leave, overtime pay, minimum wage, workers compensation, and unemployment insurance.26 ROC has come under fire for using this subcontracting model in other industries as well. For example, at car dealerships there are a number of employees who report not being paid all the wages they were owed.

Eustolio Hernandez worked for a subcontractor of ROC cleaning a car dealership. He worked 7 days a week, overnight shifts of between 9-

11 hours. When the subcontractor told him he was going to be paid as an independent contractor instead of an employee, he decided it was time to leave the job. The subcontractor refused to give him his last paycheck of $1,625, and ROC says it is not their responsibility.

A Wall Street Journal article about problems faced by immigrant workers featured a Minnesota couple who worked for ROC.27

In November, Alba and Eugenio landed jobs at ROC Inc. for a net sum of $155 each per week to wash a Chevrolet dealership six nights a week in the St. Paul suburb of Roseville. Pay stubs don't show an hourly rate. The couple say they didn't receive benefits or paid time off. . . . People familiar with the company say that ROC, which has contracts with dealers selling major car brands, paid wages that dipped below the federal minimum wage."

Non-Sufficient Funds Page 12

The cities of Minneapolis and St. Paul

have set $15.16 as their current "living

wage" levels, which is what employees

must be paid by businesses that receive

subsidies from the city.

The Need for $15 There is growing awareness of the need for a $15/hour minimum wage. Throughout the country, fast food workers, retail department store workers, home care and child care workers and others have delivered a loud and clear message that they cannot survive on poverty wages, and that they demand a raise to $15 per hour.

The list of victories continues to grow. Several cities have adopted a $15/hour minimum wage, including Seattle, San Francisco, and Los Angeles. A number of public institutions have raised wages to $15 for their own employees and some private employers have also established minimum wage rates of at least $15, such as Aetna and most recently Amalgamated Bank.

The Twin Cities area has not been exempt from this movement. Earlier this year in contract negotiations, Allina Health agreed to guarantee a minimum wage of $15 per hour for all its hospital workers.28 Workers at the Minneapolis-St. Paul Airport have been demanding minimum pay of $15/hour.29 The Minneapolis City Council has formed a working group and will commission a study to look at the impact of raising the minimum wage to $15.30

The cities of Minneapolis and St. Paul have set $15.16 as their current "living wage" levels, which is what employees must be paid by businesses that receive city subsidies.31 This is the amount a worker

must earn to afford adequate shelter, food, and other basic necessities.

In August 2015, Amalgamated Bank announced that it was raising its minimum wage to $15 an hour and called on the banking industry to join it. "We're fortunate enough to be part of the wealthiest industry

in America, so I'd hope others in the financial industry will follow. It's the right thing to do," said CEO of Amalgamated Bank Keith Mestrich.32

US Bank and Wells Fargo should follow the lead of Amalgamated Bank and ensure that their employees and workers hired by subcontractors are paid at least $15 an hour.

As two of the largest employers in Minnesota, they should guarantee that their employees and subcontracted workers have adequate paid time off to care for themselves or their families and have fair workweek scheduling with access to full-time hours and without last minute changes.

The Minneapolis City Council is currently considering a set of policies to address these issues and to raise standards for working families. Wells Fargo and US Bank should support these policies and use their leadership role in local business trade groups to ensure that those groups do not obstruct or derail the adoption of these policies that will dramatically improve conditions for workers in Minneapolis.

About Us

15 Now is a national organization that began in Seattle and which won a historic

victory in June 2014 making that the first city with a $15 minimum wage. With the support of a growing number of unions and community groups, 15Now has spread to over 20 cities in the U.S. Our goal is to empower working people and activate them into fighting for the movement. 2722 University Avenue SE, Minneapolis, MN 55414, https://15nowmn.org/

Minnesotans for a Fair Economy is a coalition of labor, community, and faith

organizations that are fighting for an economy that works for us all. 2233 University Avenue W #432, St. Paul, MN 55114 www.mnfaireconomy.org

Neighborhoods Organizing for Change (NOC) is a grassroots, member-led

organization building power in under-resourced communities and communities of color across the Twin Cities. Together, NOC members fight for racial and economic justice.. We're building powerful, active campaigns for better public transit, workers' rights, expanded voting rights, and police accountability. 1101 W. Broadway Ave., #100 Minneapolis, MN 55411 http://www.mnnoc.org

Service Employees International Union Local 26 is Minnesota’s Property

Services Union, uniting more than 7,000 janitors, security officers, and window cleaners in the Twin Cities metropolitan area. 706 N 1st St # 110 Minneapolis, MN 55401 http://www.seiu26.org ---------------------------------------------------------------------------------------------------

This is the first in a series of reports titled "Inside the Vault: Exposing how US Bank and Wells Fargo Harm Minnesota Communities," that will examine the different areas in which US Bank and Wells Fargo negatively impact Minnesota, including education, the economy, electoral politics, consumer lending, and the environment.

Endnotes

406.11.14

1 Vasquez, Mario. "Behind the Business Attire, Many Bank Workers Earn Poverty Wages," In These Times, August 27, 2015

2 US Bank Salaries: Teller Hourly (n.d.) Retrieved September 10, 2015 from http://www.glassdoor.com/Salary/U-S-Bank-

Salaries-E8937.htm 3 Affirmative Action Statistics Data Packet: Minneapolis-St. Paul MSA (n.d.) Retrieved September 10, 2015 from

http://mn.gov/deed/images/Minneapolis_St_Paul_MSA.pdf 4 The Public Cost of Low-Wage Jobs in the Banking Industry, UC Berkeley Labor Center, October 27, 2014, Allegretto,

Sylvia; Jacobs, Ken; Graham-Squire, Dave; and Scott, Megan Emiko. 5 Hammerand, Jim. "Two Minnesota bank CEOs were among top-paid in U.S.," Minneapolis-St. Paul Business Journal, July 16, 2015

6 Affirmative Action Statistics Data Packet: Minneapolis-St. Paul MSA

7 A $15 Minimum Wage for Bank Workers, National Employment Law Project, August 2015

8 May 2014 Metropolitan and Nonmetropolitan Area Occupational Employment and wage Estimates: Minneapolis-St. Paul-

Bloomington, MN (n.d.) Retrieved September 10, 2015 from http://www.bls.gov/oes/current/oes_33460.htm 9 Jerving, Sara. "Bank Tellers Battle Obsolescence," Wall Street Journal, November 17, 2014.

10 The Public Cost of Low-Wage Jobs in the Banking Industry

11 Affirmative Action Statistics Data Packet: Minneapolis-St. Paul MSA

12 North Minneapolis: Introduction (n.d.) retrieved September 10, 2015 from http://northsidefunders.org/wp-

content/uploads/2014/03/5.3-NorthMpls-Workforce-Report-June-2014.pdf 13

Ibid 14

NAACP Opportunity and Diversity Report Card: The Consumer Banking Industry. 2014. 15

Affirmative Action Statistics Data Packet: Minneapolis-St. Paul MSA 16

Top Employers Statewide (n.d.) retrieved September 10, 2015 from http://mn.gov/deed/business/locating-minnesota/companies-employers/top-employers.jsp 17

Ibid 18

U.S. Bancorp Workforce Demographics (U.S.), 9/30/14, retrieved on September 10, 2015 from https://www.usbank.com/careers/diversity/workforce-demographics.html 19

Ibid 20

Hammerand, Jim. "Minnesota bank battle: U.S. Bank closing gap on Wells Fargo," Minneapolis-St. Paul Business Journal, October 5, 2013 21

Based on an average of 5.4 tellers per branch and a total of 314 US Bank and Wells Fargo branches in Minnesota 22

Wells Fargo Salaries: Teller Hourly (n.d.) Retrieved September 10, 2015 from http://www.glassdoor.com/Salary/Wells-Fargo-Salaries-E8876.htm 23

US Bank Salaries: Teller Hourly 24

Hammerand. "Two Minnesota bank CEOs were among top-paid in U.S" 25

Ibid 26

Misclassification of Employees as Independent Contractors (n.d.) retrieved September 10, 2015 from http://www.dol.gov/whd/workers/misclassification/ 27

Jordan, Miriam. "Immigration Audits Drive Illegal Workers Underground, Wall Street Journal, August 15, 2011 28

DeLage, Jaime. "Allina hospitals to raise service workers to $15 minimum wage, Pioneer Press, April 18, 2015 29

"MSP workers continue efforts to $15 wage," Workday Minnesota, August 16, 2015 30

"Can Minneapolis Work for Working People?" Truth to Tell radio show, aired August 10, 2015 31

"Background Information on Living Wage," Memo to Metropolitan Airports Commission from Greg Failor, Labor Relations Manager, April 13, 2015 32

http://money.cnn.com/2015/08/06/news/amalgamated-bank-15-minimum-wage/