Wells Fargo says raises were not linked to tax bill passage — then backtracks
Wells Fargo & Co.’s move to raise its minimum pay to $15 an hour was part of a long-term plan and not related to the passage of the Republican tax overhaul as the company implied, said a bank spokesman, who later backtracked and stated the hikes were a result of the bill’s approval.
The bank was among several large corporations to publicly announce pay raises or new investments immediately following the final House vote in an apparent public relations offensive to boost the popularity of the tax bill
The San Francisco bank had implied the direct linkage to the tax legislation in a news release Wednesday, shortly after Congress passed the tax overhaul, which slashes the corporate tax rate to 21% from 35% starting Jan. 1.
Asked by The Times to clarify the connection on Wednesday, Wells Fargo spokesman Peter Gilchrist said there was none.
“As it relates to team members, minimum pay is a topic that we continue to review as part of our efforts to attract and retain talent, and we have been on a path to increasing the minimum hourly rate, having most recently increased it in January 2017,” Gilchrist said in an email in response to an inquiry from The Times.
Asked directly to confirm that the pay raises were not a result of the tax bill, Gilchrist said, “That is correct.”
On Thursday, Gilchrist backtracked.
“We believe tax reform is good for our U.S. economy and are pleased to raise our minimum hourly pay to $15 as a result,” he said after The Times’ article appeared online.
He would not comment on the reason for the earlier statement or whether Wells Fargo would have raised its pay if the tax bill had not passed.
Arati Sontakay Randolph, a Wells Fargo senior vice president, said that Gilchrist had misspoken Wednesday.
“Our spokesperson made a mistake, and we apologize for this,” she said Thursday. “Our announcement was directly related to the passage of tax reform.”
AT&T Inc., Boeing Co., Comcast Corp. and Fifth Third Bank all said Wednesday they would boost U.S. investment or worker pay, or both.
“AT&T plans to increase U.S. capital spending $1 billion and provide $1,000 special bonus to more than 200,000 U.S. employees. And that’s because of what we did, so that’s pretty good,” Trump said to applause from Republicans during a celebration of the tax bill’s passage at the White House on Wednesday.
Ed Mills, a Washington policy analyst for financial services firm Raymond James, said the similarity of the announcements, including the same $1,000 employee pledge in several of them, indicated this was a coordinated public relations move designed to curry favor with Trump and congressional Republicans.
“What this administration has shown is the president very much pays attention to the headlines and kind of likes companies showing that his legislative actions and his regulatory actions can have a positive benefit for their employees,” Mills said.
He also noted that banks and telecommunications companies are highly regulated in Washington.
“The most regulated industries always value goodwill in D.C.,” Mills said.
AT&T in particular is facing regulatory challenges after proposing an $85.4-billion takeover of Time Warner Inc., the owner of HBO, CNN, several other cable networks and the Warner Bros. film and television studio. Last month, the Justice Department sued to block the deal on antitrust grounds.
Wells Fargo also could use a boost to its reputation in the wake of the unauthorized-accounts scandal that led to sharp criticism from lawmakers.
In its Wednesday announcement, the bank said it was “pledging the following actions once tax reform is signed into law.”
The first was raising the minimum hourly rate for U.S.-based employees to $15 an hour from the $13.50 rate the company announced in January.
Wells Fargo also said it was “targeting $400 million in donations to community and nonprofit organizations in 2018” and would target contributions of 2% of after-tax profits for corporate philanthropy beginning in 2019.
“We believe tax reform is good for our U.S. economy and are pleased to take these immediate steps to invest in our team members, communities, small businesses and homeowners,” Wells Fargo Chief Executive Tim Sloan said in the news release.
Gilchrist said about 36,000 employees will get a pay raise. He would not say how much the pay raises would cost the bank or how much it anticipates saving because of the tax cuts and other changes in the legislation.
Raymond James estimates that the corporate tax cut will boost earnings for the average U.S. bank by 18%. In 2016, Wells Fargo had $21.9 billion in profits, which was down 4% from the previous year because of the fallout of the unauthorized accounts scandal.
Times staff writer Tracy Lien contributed to this report.
1:10 p.m.: This article was updated with comment from Arati Sontakay Randolph, a Wells Fargo senior vice president.
11:10 a.m.: This article was updated with Wells Fargo spokesman Peter Gilchrist saying Thursday the pay raises were a result of the tax bill.
This article originally was published at 9:50 a.m.
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