Here’s what happened last time Wells Fargo CEO took questions from lawmakers
Wells Fargo has laid off hundreds of U.S. employees during the past year as it pushed many of their jobs overseas, according to an Observer analysis of federal documents.
In the Charlotte metro area, the bank’s largest employment hub, mortgage jobs eliminated this year have also been sent overseas, Wells confirmed. The bank slashed hundreds of such workers in the area but would not disclose how many of those jobs it has sent outside the U.S.
The documents, published online by the U.S. Department of Labor, shed light on how Wells Fargo has shifted work out of the country. Many of the U.S. layoffs have affected call center operations, including about 460 employees cut last year when Wells Fargo announced the closure of a site in Pennsylvania.
Wells Fargo has not always disclosed that it was relocating U.S. jobs in announcing the layoffs. But the documents — findings of Labor Department investigations into the cuts — show the bank has sent the work outside of the country.
In the past year, the department investigated 636 layoffs reported by employees and state officials seeking determinations that the workers’ jobs were being shipped out the U.S., documents show. The findings are required before workers can receive federally-funded benefits, like weekly income payments and training so they can find new jobs.
What’s not clear is how many of the 636 jobs Wells sent overseas, although the documents state that a “significant” number were. The Labor Department’s findings also do not name countries where jobs were sent, but Wells Fargo reported expanding its Philippines operations in recent years.
When it announced the Pennsylvania call center closure in October 2017, the bank said that the work done at the facility was not being relocated.
“This decision is being made primarily because we have experienced a drop in call center volume,” Wells spokeswoman Christina Carmichael said at the time. “These jobs are not being moved anywhere.”
But in its findings, the Labor Department said the bank shifted the work to an unnamed foreign country, “which contributed importantly to worker group separations” at the call center. Wells Fargo declined to comment on the Labor Department’s findings, and did not address an Observer question regarding the discrepancy in what happened to the jobs.
“Wells Fargo has been caught lying again,” Erin Mahoney, spokeswoman for New York-based Committee for Better Banks, said in a statement. The coalition of industry employees pushes for better working conditions at banks.
“This time, the bank tried to cover up why it’s laying off frontline employees who live paycheck to paycheck instead of coming clean about shipping their jobs overseas,” Mahoney said.
In response, Wells stated, “This is a structure that is common in the industry and we have long been transparent about it. We strongly disagree and take issue with any claims that say otherwise. We value our international team members as an integral part of our workforce, yet the vast majority of Wells Fargo team members will continue to be based in the U.S.”
The overseas moves come as the San Francisco-based bank seeks to trim billions in costs and recover from a string of scandals in recent years.
Wells Fargo has previously acknowledged that moving jobs overseas could be part of its efforts to centralize operations following a 2016 scandal involving fake accounts opened by bankers seeking to meet high-pressure sales goals, the Observer reported last year.
“It’s shameful that an American company like Wells Fargo is slashing jobs at home and outsourcing them abroad, all while planning to spend more than $24 billion on stock buybacks that benefit only the bank’s executives and shareholders,” Sen. Elizabeth Warren, a Massachusetts Democrat, said in a statement to the Observer. Warren is a long-time Wells critic and member of the Senate Banking Committee.
Wells stated in June that it planned to repurchase billions in its stock through the second half of next year.
In a statement to the Observer, the bank did not rule out sending more work outside the U.S. It also is aiming to cut its total employment by 5 to 10 percent over the next three years under a plan announced in September.
The bank continues looking for ways to streamline operations, it said in the statement to the paper. Those efforts include moving work to other U.S. locations and, in some cases, out of the country to reflect its need to operate in a 24-hour business cycle, it said.
An ongoing trend
Banks, technology firms and retailers like Mooresville-based Lowe’s have sent U.S. jobs to other countries, such as India and Mexico, where labor costs tend to be cheaper.
In January, for example, the Department of Labor confirmed that New York-based JPMorgan Chase was moving work overseas after Texas employees had reported that the bank was laying off 500 people in that state.
And in March, the department determined that Charlotte-based Bank of America was pushing work outside the U.S. following 10 California layoffs reported in 2017.
In Charlotte, Bank of America and Wells Fargo are by far the two biggest banks, employing roughly 40,000 people combined.
Bank of America, in recent years, has not sent as many jobs overseas as Wells Fargo, the Labor Department documents show. Over the past two years, the department investigated reports by workers and state officials involving at least 70 total layoffs of Bank of America workers and determined the work had been moved outside the U.S.
Just in mid-December, the Labor Department said it determined that Wells Fargo had pushed work overseas after the agency investigated a September report of 115 consumer lending customer management layoffs in Minnesota.
For Wells, the documents provide previously unknown details on its efforts to relocate U.S. jobs.
The Labor Department, for instance, said it continues to investigate a July report of 28 New York layoffs affecting Wells employees in residential renovation mortgage services.
Even as it ushers jobs out of the United States, Wells Fargo says 90 percent of its 262,000 employees are in this country and will continue to be here.
“Wells Fargo’s global workforce represents a small percentage of our total workforce and also is small relative to many of our peers,” Wells said.
According to disclosures on the banks’ websites, about 84 percent of Bank of America’s employees are in the U.S. That figure is roughly 67 percent at JPMorgan. For those banks and Wells Fargo, their overseas operations, such as investment banking, are not necessarily functions that were previously based in the U.S.
The Charlotte region will also remain home to Wells Fargo’s largest employment hub, which has more than 25,500 workers, the bank said.
Critics note that when jobs are sent overseas, it’s American taxpayers who are left picking up the tab.
That’s because if the Department of Labor determines jobs have been moved overseas, affected workers can receive benefits from the federal Trade Adjustment Assistance program. That aid includes weekly income payments, training to acquire new skills and relocation allowances.
Moving jobs outside the U.S. also causes the federal and state governments to lose income tax and other tax revenue from the unemployed workers, and some of those workers may wind up on food stamps, said attorney John Miano. He works for the Immigration Reform Law Institute in Washington, D.C., the legal arm of the conservative Federation for American Immigration Reform.
In addition, when companies shut down a large operation, it can be hard for those workers to find jobs as they all compete with one another in the same geographic area, he said. “The effect is not only on the people who lose their jobs,” Miano said. “It has a major impact on everyone else.”
In the Philippines
Wells Fargo did not disclose where it is sending the U.S. jobs, saying it is difficult to correlate U.S. job cuts “with the work being done in our international locations.” But the bank has had operations in the Philippines since at least 2011 and has been bulking up its operations there recently.
Last year, the bank said its operation in the Philippines had grown from less than 100 to more than 4,000 workers over six years. The bank also said it was building another Filipino location that could hold more than 7,000.
Wells Fargo CEO Tim Sloan last year came under fire from lawmakers over sending jobs overseas during a Senate hearing on the fake-accounts scandal. Questioned at the hearing about the bank’s Filipino operations, Sloan said positioning employees worldwide helps the fourth-largest U.S. bank by assets serve customers around the clock.
In 2012, the Observer, citing an internal memo, reported that Wells Fargo was preparing to outsource jobs in its institutional retirement division to India and the Philippines. Some of those jobs were expected to come from Charlotte, the paper reported at the time.
In the U.S., low-skilled, labor-intensive jobs are the most popular ones for companies to send offshore, said Martina Musteen, business professor at San Diego State University.
Many of those positions are hard to fill in the U.S., where a call-center job is not necessarily viewed as prestigious, she said. But in countries with emerging economies like the Philippines, call center work is a well-respected career, she said.
Meanwhile, U.S. lawmakers are watching the industry closely.
This year, lawmakers have heavily criticized Wells Fargo and other big banks for shipping jobs overseas, citing the huge savings they are reaping from corporate tax cuts signed into law by President Donald Trump in 2017.
In recent months, Wells Fargo has drawn more scrutiny for sending jobs out of the U.S. than some of its peers, in large part because of how much it is benefiting from the tax cuts.
Among major U.S. banks, Wells Fargo’s estimated annual tax cut of $3.7 billion is the biggest, according to Americans for Tax Fairness, a left-leaning Washington, D.C.-based group.
“It’s especially galling to us that taxpayers are having to help these workers out at the same time that ... Wells Fargo was the biggest beneficiary of last year’s tax cut,” said Shane Larson, spokesman for the large Communications Workers of America union.
“We have millions of Americans that are willing to have these jobs,” he said.
Porter McConnell, with the Washington, D.C., group Americans for Financial Reform, said Wells Fargo’s transferring of jobs overseas is not surprising.
“One way the tax cut lined the pockets of executive and shareholders was by reducing tax rates on income from overseas, which creates a powerful incentive to shift jobs and cash out of the United States,” she said.
Meanwhile, lawmakers have continued to step up their pressure on the bank for sending jobs overseas.
In a January letter to CEO Sloan, Sen. Bob Casey, D-Pa., expressed concern about the hundreds of call-center layoffs in his state while Wells has been growing its operations in the Philippines.
In an August letter to Sloan, Sen. Catherine Cortez Masto, D-Nev., said she had serious concerns about the bank’s June announcement to close a call center in Nevada and lay off about 340 employees.
“It is alarming that these layoffs are occurring despite the astronomical benefits that Wells Fargo will receive from the” tax cuts, she wrote.
For its part, Wells Fargo said it has made important investments in its U.S. operations since the tax cut. For example, it raised the minimum wage this year for its lowest-paid employees to $15 per hour, after a $1.50 per hour raise announced after Trump signed the tax law.
And Wells Fargo said it will continue to be one of the largest corporate income taxpayers in U.S. because the overwhelming majority of its businesses, employees and operations are in this country.