Fifth Third Bank's $1,000 Bonuses Are Shrewd Business Move, Experts Say
Fifth Third Bancorp is promising to raise its minimum wage to $15 per hour and give most of its employees a $1,000 bonus after President Trump signs the GOP tax cuts into law.
The Cincinnati-based company announced the decision Wednesday, saying it wants to pass on the savings. But some experts say it has other reasons to "spread the wealth."
In addition to Fifth Third, another bank, Wells Fargo, and two telecom companies, AT&T and Comcast, have also announced raises or bonuses in the wake of the tax overhaul passing.
"These are sectors that have been under fire a lot this year," said Deborah Mitchell, a professor of marketing at Ohio State University. "They are motivated to try and improve their organizational image."
Giving out cash could be an effective PR move for some companies, said Mitchell. But she said there aren't likely to be many copy cats. That's because such a move could backfire if a company doesn't have a genuine reputation for being employee-friendly.
"If they have not been employee friendly in the past, this is going to be viewed very skeptically and very cynically," she said.
Either way, bonuses can help generate good will with employees, right?
"Goodwill has got nothing to do with it," said Randy Olsen, a labor economist at Ohio State University.
Jobs opportunities will be created by the tax bill, Olsen said, which means employees will have more options. If companies don't want to lose workers, giving them a raise is one way to keep them happy. So, if corporate tax cuts give company's extra cash, it's just good business to pass some of that on.
The price for that loyalty, according to Fifth Third, is about $25 million dollars in raises and bonuses. That's equal to about 1.7 percent of the company's net profit last year of $1.5 billion.