Jan. 03--Whether the new corporate tax cuts should be labeled "supply-side" or "trickle down" economics, major banks in Memphis and across the South say they are passing along some of the savings to their employees and markets.
Regions and SunTrust banks have announced in the past several days they are raising their hourly minimum wage to $15 and applying part of the tax savings in other ways.
Memphis-based First Tennessee credited the tax reform for a one-time bonus it has given employees.
For Regions, the $15-an-hour minimum wage is 25 percent more than the $12 the bank pays most of its lowest earning workers and 47 percent more than its formal lowest wage of $10.15 an hour.
In Memphis, where the Birmingham-based bank has branches and a customer service center, the wage hike will affect about 400 employees. About a quarter of all Regions employees will benefit, bank officials said.
In addtion, Regions announced it will contribute $40 million to the company's charitable foundation for financial education, job training, economic development and affordable housing.
And Regions will increase its capital expenditures budget by about $100 million, or 50 percent, over the 2017 level for investments in facilities, technology, product innovation, and customer service.
The bank's press release tied the wage hikes, charitable giving and capital investments to the substantial new corporate tax cuts approved last month. The corporate tax rate is dropping from 35 percent to 21 percent.
"Regions is making these investments in anticipation of the savings it will recognize as a result of federal tax reform intended to support economic growth," the bank's press release states.
SunTrust's chief executive also credited tax reforms for his bank's actions.
"The anticipated benefits from tax reform allow us to build upon our purpose of Lighting the Way to Financial Well-Being in a sustainable way by implementing actions that will have a multi-year impact for many of the constituents that count on us," SunTrust's Bill Rogers said in a release.
"We believe tax reform will improve the competitiveness of American business and promote economic growth, and this gives us confidence to invest more in our company, our teammates and the communities we serve."
SunTrust will make another $50 million in community grants to financial well-being programs, give merit-based raises to "certain other hourly" employees comprising about 20 percent of its workforce, make a 1 percent contribution to the company's 401(k) retirement funds for all employees in addition to the usual match of up to 6 percent, and fund a $1,000 financial incentive for all employees who complete a financial fitness program.
The federal minimum wage has remained at $7.25 an hour since 2009. The bump by the banks comes at a time when some groups have been organizing and protesting to establish a "living wage" of $15 an hour.
That amount would provide a yearly income of $31,200, assuming a 40-hour work week.
Economist David Ciscel, a University of Memphis professor emeritus, has told The Commercial Appeal, "It takes $30,000 to $40,000 per year to be free of poverty-like conditions for a family of three."
In recent years, the "vast majority" of Regions' hourly positions paid $12 or more an hour, bank spokesman Jeremy D. King told The Commercial Appeal by email.
"Officially, our minimum wage has been $10.15 per hour since October 2014; however, again, most positions were at $12 or more since then," he said.
The Regions jobs affected by the increase could range from various entry-level positions at bank branches such as certain telller positions to jobs at the customer service and operations centers, King said.
Asked how much much money Regions Bank anticipates saving as a result of the tax cuts, King said, "We are still evaluating the total savings.
First Tennessee Bank cited the tax reform in giving its employees a one-time bonus. The Memphis-based bank did not reveal its minimum hourly wage.
"First Tennessee pays above minimum wage in all our markets and we offer competitive compensation packages to employees across our footprint," said John Daniel, executive vice president and chief human resources officer for First Horizon National Corp., parent company of First Tennessee.
"We are pleased to have moved so quickly to reward our employees with one-time bonuses following the recent tax reform legislation and we continue to use some of the tax savings to invest in our people," Daniel said.
Regions chairman and chief executive Grayson Hall said in his bank's release this week, "We understand that the growth of our company is based on the economic vitality of the communities where we do business, as well as the work from our team of talented associates who are committed to serving our customers every day.
"The investments we are announcing today in our workforce, our communities and our company reflect our commitment to creating shared value and will support sustainable growth that ultimately benefits our customers and shareholders."
The wage increase will help provide "sustainable career paths and professional growth opportunities for all associates," the Regions Bank statement says.
Bank of America, whose market share in Tennessee and Memphis is 7 and 4 percent, respectively, gave all its U.S. employees who make up to $150,000 a year a $1,000, one-time bonus after tax reform was approved, spokesman Matthew Daily said.
Last February, long before the tax cuts, Bank of America increased its minimum wage from $13.50 to $15 an hour.
A number of other large banks, including BB&T Corp., PNC Financial Services, Wells Fargo and Fifth Third Bancorp also are raising employee wages and benefits or making other investments thanks to the tax cut, Housingwire reported this week.
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