Dive Brief:

• Bank of America will raise its minimum hourly wage to $20 an hour in a two-year phase-in, it announced Wednesday. The bank's minimum hourly rate will increase to $17 on May 1, 2019, and will continue to rise until it reaches $20 an hour in 2021. The bank called the increase part of its commitment to be a "great place to work" and maintain its growth through competitive programs and benefits for its more than 205,000 employees, according to the press statement.
• The bank said it has regularly increased its hourly wage over the years, citing a $4-an-hour hike over its minimum rate since 2010 — including an increase to $15 an hour two years ago. According to the bank, the average pay rate for all U.S. hourly workers is "significantly above this level."
• "We are raising our minimum wage because we believe that to best serve our customers and clients, we need the best teams," Sheri Bronstein, Bank of America's CHRO, said in a statement. "Saying thank you, celebrating great work, and sharing our success further demonstrate our commitment to being a great place to work." According to the bank, its pay-for-performance philosophy, based on its core values and culture, inspires employees to do good work, builds trust within teams and retains talent.

Dive Insight:

Despite projections of modest pay increases for 2019, a growing number of employers are using hourly pay increases with in-demand benefits and perks to attract and retain talent in an employee-driven labor market.

Bank of America is among the latest companies to announce an hourly minimum wage increase of some significance, for which it earned praise from some U.S. lawmakers in a House Financial Services Committee hearing Wednesday. But it hasn't been completely smooth sailing for the company: An advocacy organization, Good Jobs First, called out the bank in January for paying out the largest settlement agreement of any other employer since 2000 — $210 million — to resolve a discrimination claim. Big banks and retailers were cited as the top 10 biggest payers in settling claims.

Traditionally, retailers and employers in the hospitality industry paid lower wages and had higher turnover rates — a reputation that employers in those industries are actively working to undo as the labor market tightens. Banks and financial institutions also have been under particular scrutiny from activist investors regarding their pay rates and potential pay disparities for women and people of color. Activist investment group Arjuna Capital approached Bank of America, MasterCard, Citigroup and other financial institutions, as well as tech companies, about pledging to disclose their gender pay gaps. Bank of America and other organizations reportedly agreed to do so last year.