Bank of America, (BAC - Get Report) , the second-biggest U.S. bank, said it would raise the minimum hourly wage for employees to $20 by 2021 from about $15 currently in an effort to improve recruitment and retention efforts.
A step increase in the minimum hourly rate to $17 will take effect at the start of next month, the Charlotte-based bank said in a press release.
"We are raising our minimum wage because we believe that, to best serve our customers and clients, we need the best teams," Sheri Bronstein, the bank's chief human resources officer, said in the release.
The bank raised its minimum wage to $15 two years ago, and the average rate for all U.S. hourly workers is "significantly above this level," according to the press release. The bank has about 205,000 employees.
The announcement comes as more U.S. companies say they're having to pay up to recruit qualified workers for job openings, partly because the U.S. unemployment rate was already low when President Donald Trump pushed through $1.5 trillion of tax cuts in late 2017, stimulating the economy.
The unemployment rate, currently at 3.8%, is close to the lowest in a half century, and economists say hourly wages are creeping up -- typically a precursor of higher inflation, since businesses often try to recoup the added labor cost by raising prices for end products and services.
Of course, Bank of America CEO Brian Moynihan got a 15% raise last year to $26.5 million of total compensation, including salary, bonus and incentives. Even assuming a 50-hour work week and a 52-week year with no vacation time, that works out to $10,192 an hour.
Bank of America stock fell 0.6% to $29.