In the wake of the racial reckoning that shook the world’s conscience in the summer of 2020, many companies rightfully focused their attention on diversity, equity, and inclusion (DEI), measuring worker well-being, engagement, productivity, retention, and advancement. But progress on all of these fronts will be impossible without one foundational element: adequate, equitable wages and supportive benefits.
Employers can determine family-sustaining wages in their location by consulting MIT’s Living Wage Calculator. They can provide key benefits including, at a minimum, health insurance, paid family and sick leave, and retirement options that help support long-term financial stability and wealth creation. In addition, leading executives will consider stable scheduling—a critical factor for hourly worker well-being that companies often overlook.
Why it works
Living wages and benefits are fundamental to racial equity, given that Black and Latinx workers disproportionately occupy hourly frontline roles in service industries, which tend to pay minimum wage with limited benefits. As a result, 43% of Black workers and about 40% of Latinx workers earn less than $30,000 per year.
Furthermore, the evidence is clear: Higher wages lead to healthier, happier workers. To enable the strongest outcomes for their employees, executives can take several actions:
- Conduct pay equity analysis and report on results transparently, which helps reduce inequities across race and gender over time.
- Design retirement plans with features like automatic deposit to help workers save for the future, reducing the racial wealth gap over time.
- Provide scheduling predictability and flexibility for hourly workers. This is crucial to employee well-being, as unpredictable schedules are associated with psychological distress.
The adoption curve
While wages and benefits differ vastly by geography and industry, the combination of living wages and benefits is still not widely implemented across the US. This is an acute problem in service industries with large, low-wage frontline workforces. For example, health insurance is available to only 27% of low-wage workers. And more than half of retail and food service workers get less than a week’s notice of their schedule.
Executives have an opportunity to strengthen the business case for living wages and benefits by emphasizing the direct connection to their employees’ engagement and productivity. Given the ongoing, often polarizing debate around this topic, it is especially important for business leaders to take a firm stance. Offering a living wage and benefits is the clearest way employers can indicate that they value their employees. Without this integral step, companies may undermine their other DEI practices.
How Bank of America took action
Bank of America recently announced its second minimum-wage increase in the US in two years. It will raise its minimum wage to $25 an hour—a living wage in most US markets—by 2025. In addition to competitive wages, Bank of America provides an extensive benefits package. Ranked second best in the industry, it includes affordable healthcare, 16 weeks of paid parental leave, and an innovative employee assistance program called Life Event Services, which provides support to employees for all types of personal and professional challenges.
As of 2019, Bank of America’s employee satisfaction was at a record high. More recently, 92% of its employees said it is a great place to work. And according to a 2021 report by Glassdoor, Bank of America received the second-highest satisfaction rating (4.0 out of 5.0) from employees identifying as Black or African American out of 28 companies analyzed.
“A core tenet of responsible growth is our commitment to being a great place to work, which means investing in the people who serve our clients,” said Sheri Bronstein, chief human resources officer at Bank of America. “That includes providing strong pay and competitive benefits to help them and their families, so that we continue to attract and retain the best talent.”