One of our biggest job killers, Bank of America offers $20 an hour pay to its remaining employees. Moreover, Bank of America shows how technology kills jobs and raises wages.
Predictably, Bank of America’s decision to raise its average pay from $17 an hour to $20 excites the corporate media. However, the big media fails to mention that Bank of America (NYSE: BAC) is one of our biggest job killers.
In fact, Bank of America CEO Brian Moynihan brags about the 84,000 people BOA cut from its workforce in the past nine years, CNBC reports. To explain, Bank of America, or BOA, employed 288,000 people in 2010, and 204,000 in October 2018, Moynihan estimates.
Bank of America Shows Technological Unemployment is real
“Step back and think about that,” Moynihan says of BOA job cuts, since he took over in 2010. The reduction is “more employees than Delta has I think. All caused by the ability to apply technology to processes and capabilities, and customer behavior changed.”
To clarify, Delta Airlines (NYSE: DAL) employed around 80,000 people in October 2018, CNBC reports. Thus, Moynihan admits technological unemployment is real and tells us how it works.
For instance, Bank of America used artificial intelligence and robotic process automation to cut 84,000 work hours from its Wall Street division. In addition, Moynihan admits to eliminating 10,000 management positions in a few years.
Bank of America shows how Apps kill Jobs
Interestingly, one of the biggest pieces of job-killing tech at Bank of America is something most of us love: apps.
Specifically, a combination of mobile banking and ATMs enables BOA to close under-performing branches, Moynihan claims. To explain, people no longer need to go to banks to cash; or deposit checks, because of direct deposit. In addition, automatic teller machines (ATMs) let you get cash without a teller.
Apps kill teller’s jobs because they let you scan; and deposit, checks with a phone’s camera. Moreover, many Bank of America automatic teller machines allow you to withdraw cash with digital wallets like Apple Pay and Google Pay.
Thus, BOA can replace branches with ATMs, and still service most of its customers. Consequently, Bank of America makes more money because its operating costs are lower.
Job Killing Tech is good for Business at Bank of America
In fact, Bank of America’s financial numbers show job-killing tech is good for business.
For example, BOA records a gross profit of $22.736 billion; a net income of $7.278 billion, and an operating income of $9.603 billion for 4th Quarter 2018. Moreover, Bank of America had $446.029 billion in cash on 31 December 2019.
One person who is aware of BOA’s profit is Warren Buffett. Notably, Berkshire Hathaway (NYSE: BRK.B) owns 9.5% of Bank of America’s shares. Impressively, Berkshire Hathaway (NYSE: BRK.A) earned $2.096 billion in retained earnings and $551 million in dividends from its BAC shares in 2018, Buffett claims.
“There’s class warfare, all right, but it’s my class; the rich class, that’s making war, and we’re winning.” ― Warren Buffett.
Hence job-killing tech benefits the billionaire class, corporate America, and BOA shareholders, like me. Strangely, Bank of America also shows how job-killing tech is good for many employees.
Bank of America shows the positive side of Technological Unemployment
On the positive side, Bank of America plans to raise its minimum wage to $20 an hour by 2021.
Hence, the minimum pay at BOA will be $41,000 a year, Fortune estimates. Thus, an entry-level worker at Bank of America will earn almost $10,000 more than the average American.
To explain, the Federal Reserve Bank of St. Louis estimates the real personal median income in the United States; the income the average American takes home, was $31,099 a year in 2016. Hence, Bank of America can pay above average wages because it makes more money.
Therefore, those who can find jobs make more money because of technology. On the negative side, there will be fewer jobs that will be harder to get.
What Bank of America Teaches Us about Technological Unemployment
The situation at Bank of America offers some important insights about technological unemployment.
First, most people who lose jobs to technology are office and clerical staff, not factory workers. Second, technological job loss heavily affects the middle class, and lower middle class. Specifically, bank managers are middle class and tellers are lower middle class.
Third, technological unemployment hurts women more than men. In fact, Data USA estimates 83.8% of bank tellers are female. In detail, Data USA estimates there are 326,128 bank tellers in the United States.
Bank of America shows Technological Unemployment is closer than you think
Fourth, technology can wipe out entire occupations. To clarify, Data USA estimates the number of American bank tellers is falling by 8.3% a year.
Consequently, 270,686 tellers’ jobs will disappear between 2019 and 2029. Thus, most of America’s 326,128 bank teller positions will vanish in a decade.
Fifth, job loss by technology is more likely to affect middle-aged and older people. Notably, Data USA estimates the average banker teller’s age at 36. Therefore, it will be hard to train all those women for new jobs.
Sixth, technological job loss affects rural and lower income areas. For instance, the three locations with the most bank tellers are; Southwest Oklahoma, Reynolds and Carter counties Missouri, and Bingham, Madison, Jefferson, Fremont, and Teton counties in Idaho.
Bank of America shows technology is killing jobs in low-income areas
Therefore, unemployment by tech harms our poorest regions. Indeed, Fortune reports BOA and other big banks are pulling out of lower-income neighborhoods.
Specifically, big banks are replacing branches, and tellers’ jobs, in working-class areas with ATMs. Thus, tech is wiping out jobs in the places where we need employment most.
Seventh, retraining and finding jobs for all those unemployed bank tellers will be tough. Specifically, it will be hard to retrain a 45-year-old mother of two who only has a high-school diploma.
In addition, it is likely that the former bank teller lives in an area where jobs are scarce. For instance, that woman could live in a small town with little retail, and no manufacturing.
Hence, there is probably no job for her if the local bank branch closes. Consequently, many families will drop out of the middle class; because they will lose the $23,236 a year the average female teller makes.
Bank of America helps Andrew Yang’s Presidential Campaign
Under these circumstances, the biggest beneficiary from Bank of America’s technological unemployment is the presidential candidate Andrew Yang (D-New York).
To explain, Yang is campaigning on a platform of a basic income as an antidote for technological job loss. In particular, Yang believes large numbers of jobs are disappearing, necessitating the need for a $1,000 a month basic income he will finance with a Value-Added Tax (VAT) tax. Specifically, Yang thinks America needs a basic income because we cannot retrain most technological job loss victims for new positions.
Bizarrely, Bank of America and Brian Moynihan are proving Yang right. If Yang does well in next year’s presidential race, bankers like Moynihan will be partially to blame.