A Tale of Two US Banking Industries

July 2nd, 2014
in econ_news, syndication

by John West, Asian Century Institute

There are two vastly different US banking industries, the Wall Street guys and the poor average bank worker, according to the UNI Global Union's "US Bank Workers Report".

Follow up:

There are two vastly different US banking industries, the Wall Street guys and the poor average bank worker, according to the UNI Global Union's "US Bank Workers Report".

The outsized wealth and power of Wall Street captures all the headlines. Like the case of J.P. Morgan CEO Jamie Dimon, who in 2013 received a 74% pay increase making his salary close to $20 million, after being fined $20 billion dollars in regulatory and criminal charges.

But the average bank worker earns wages that are so low that almost one-third of bank tellers in America receive some sort of public assistance. Over a third of tellers are living at or below poverty level in contrast to the luxury of executives of Wall Street.

While average wages have steadily declined on Wall Street since the financial crisis of 2008, the top fifty financial CEOs’ compensation collectively rose by 26% in 2010 and by 20.4% in 2011. What this wealth discrepancy points to is a business model that drives income disparity by creating a vulnerable and work force.

The US Bank Workers Report lays out clearly the working conditions and rights of U.S. bank workers and provides a telling comparison with those of other bank employees around the world.

  1. Typical conditions for US bank workers -- the stereotypical image of an American banker may be a high-powered Wall Street executive, but in reality most employees in the banking industry are low-paid tellers, sales representatives, call-center staff and office-support personnel.
  2. Unreasonable sales goals and commission structures. Workers are under constant pressure to meet unreasonable sales goals. Meanwhile, their commission structures change regularly. These factors put workers under extreme stress, and put consumers at risk of unethical and predatory practices from banks.
  3. Outsourcing. The threat of jobs moving to low wage countries, low wage contractors, or temporary agencies is increasingly strong in the American finance industry. This threat touches all types of employees. Meanwhile, very few workers have protections against redundancy or adequate severance pay.
  4. Lack of job security and whistle blower protections. In nearly all states of the US, bank employees are “at-will”, meaning their jobs can be terminated for almost any reason at all. Though some legal protections exist for workers that report illegal activity at banks, enforcement of these protections is difficult and the law is often ignored. Without their own independent organization, most American bank employees have no recourse against unfair termination. Workers are thus unable to expose violations of the law or bank policy, for fear of being fired.
  5. Low Wages. Wages for tellers and call center workers are very low. A third of tellers in the US receive some sort of public assistance. In many cases, call-center workers in the banking industry earn half of what unionized call-center workers in other industries make. Many tellers are only given part-time hours when they require full-time work to make ends meet. Personal bankers often work over-time without being compensated in order to achieve their targets. In addition, women and workers from ethnic minorities are most likely to be in the lowest paid positions.
  6. The United States lacks many fundamental social safety nets for most workers. In particular, bank workers have no legal right to take sick leave and a very limited number of days of paid parental leave. Most bank tellers, call-center workers and processing-center workers receive very little or no paid parental leave from their employers. Health insurance is extremely expensive and many workers’ access to employer-sponsored healthcare is limited because they work part-time or because of high premiums. Defined-benefit pensions are a thing of the past – retirement security is limited to the 401(k) plans that expose workers to the whims of the stock market.

In short, the state of the financial industry in the United States mirrors that of the rest of the economy: insecurity and uncertainty for the vast majority of workers and tremendous riches for the select few.

What's the problem?

US bank workers have not been able to express their right to organize as unions, according to UNI Global Finance, a global trade union representing 3 million finance and insurance employees in 237 national unions worldwide.

There is currently no trade union as such in the finance industry in the US. This means that the employees don’t have a voice and are not able to bargain collectively for a fair pay and better working condition.

The right to organize as a union and conduct collective bargaining is clearly stated in the United Nations ILO Conventions to which the United States is a signatory. But US workers who have been trying to exercise this right have often lost their job, creating a climate of fear in the work environment.

While one-third of bank tellers in the US require public assistance just to get by, bank employees across the globe, even ones working for US-owned banks, have job security, regular raises and far more generous benefits packages.

What’s the difference? They have a voice on the job.

Because finance workers across the globe, even at US-owned banks, are organized, they have been able to negotiate benefits most U.S. workers wouldn’t even dream of. For example:

  • Brazilian finance workers receive 180 days paid maternity leave;
  • German finance workers over 50 are protected against dismissal;
  • Argentinian finance workers receive guaranteed access to pension for retirement;
  • Filipino finance workers receive a quarterly bonus 1 to 1 and 1/2 month’s pay;
  • Tanzanian finance workers have the right to be heard in all disciplinary matters;

In fact, compared to countries where bank workers have union representation US workers get 23% fewer days of paid vacation.

This is why UNI Global Finance is pushing for job security, fair pay and respect for US bank workers.

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