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Fifth Third Bank's $1,000 Bonuses Are Shrewd Business Move, Experts Say

Fifth Third Bank branch
Fifth Third Bank

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.

Adrian Ma is a business reporter and recovering law clerk for ideastream in Cleveland. Since making the switch from law to journalism, he's reported on how New York's helicopter tour industry is driving residents nuts, why competition is heating up among Ohio realtors, and the controlled-chaos of economist speed-dating. Previously, he was a producer at WNYC News. His work has also aired on NPR's Planet Money, and Marketplace. In 2017, the Association of Independents in Radio designated him a New Voices Scholar, an award recognizing new talent in public media. Some years ago, he worked in a ramen shop.