By Ray Birch
MADISON, Wis.—One credit union is forecasting that as the economy recovers from the pandemic many CUs will have little choice but to increase wages in the war for talent, adding it's a battle small credit unions will have a tough time winning.
“It’s definitely a tight employment market,” agreed Pam Peterson, senior vice president and chief human resources officer at $4.3-billion UW Credit Union. “There's a lot of folks retiring and not as many younger people to replace them. And, after the pandemic, I think people are rethinking how they want to work, and spend their time…I think more people are changing careers, and there is a big concern about women returning to work after the health crisis is over. There are a number of things impacting the labor force now.”
Whether it’s to attract more talent in a tight market, or for other reasons, Bank of America has announced plans to boost its minimum wage to $25 an hour by 2025. The bank made the announcement after completing plans in 2020 to get to a $20 minimum wage for all employees. The second-biggest U.S. bank by assets after JPMorgan Chase also said that vendors would be required to pay workers at least $15 an hour.
A ‘Foundation Wage’
In Wyandotte, Mich., Michigan Legacy Credit Union has increased the minimum wage for employees to $16 an hour from $13 an hour, a 23% increase. The rate increases to $18 an hour after one year of employment, MLCU said.
Other credit unions that have announced minimum wage increases include Coastal CU (which went to $15 an hour in 2018), Notre Dame FCU ($16/hr), GTE Financial ($16/hr) and a host of others recently announcing they were going to a minimum of $15 an hour.
“At UWCU we've had what we call a Foundation Wage. We’ve had that in place for many years and it pays $16 an hour,” said Peterson. “Anyone coming in to an entry level position gets $16. Will we have to increase that? We are discussing that right now.”
The Wall Street Journal recently predicted a “wage jolt” is on its way for many employers. The Journal cited the U.S. Labor Department recently reported the number of unfilled job openings in the U.S. rose to a record 8.1 million on the last day of March, lifting the job-openings rate—job openings as a percentage of the total number of open and filled jobs—to 5.3% from 5% a month earlier. Before the pandemic, the highest the job-openings rate had ever hit in the 20-year history of the data was 4.8% in 2018.
But it won’t just be wages that have to be adjusted, contended Peterson.
“This is not just about wages,” she said. “This is also about a good benefits package and offering career growth opportunities.”
The New Benefit Package
What is also new to the “employment package” post pandemic is offering greater work flexibility, Peterson said.
“Flexibility, for sure, and that means offering remote working opportunities as well as a hybrid of that, some work in the office, some at home,” she said.
Peterson also emphasized new hires today are looking much more closely at the culture of the organization.
“Again, today it’s about the entire package,” Peterson said, adding it has somewhat become a workers’ market.
That greater work flexibility, noted Peterson, is also driving up the competition for talent. She noted employees now, if a company offers remote work, can choose from employers across the country, making it even more difficult to compete as it isn’t just local companies against which a credit union is competing for new hires.
But there’s a flip-side, Peterson observed, pointing out the ability to hire nationally also applies to UWCU in cases where the position is 100% remote. She said UWCU already has some of those hires in place today.
Pam Peterson, UWCU
Small CUs, Big Challenge
All of that change in the landscape is enough of a challenge for a credit union such as UWCU, which has more than $4 billion in assets. The challenge become larger the smaller the credit unions, she said, pointing out it was already difficult for the smaller shops to attract and retain top talent before the pandemic. The new workplace environment has only exacerbated the situation, she said.
“It is not an easy situation for a small credit union, and I am concerned for them,” Peterson said. “I think this will lead to more mergers of small credit unions, and also to more collaborations, where small credit unions share talent.”
The battle for talent is the hottest in the areas of IT and mortgage lending, said Peterson.
“IT has always been a battle, now it is even a bit tougher,” she said. “And for mortgages, that area has just been so busy during the pandemic. There is a real fight there for entry-level talent.”
Overall, entry level positions is where Peterson believes the biggest battle will emerge coming out of the health crisis.
“You need to continually monitor wages, which we do, and we have also added more work flexibility options—from a hybrid work environment to working fully remote,” she said. “We also have a generous employee time-off plan. Any new hire immediately gets 21 days off a year. And they get their birthday off.”
All About the Balance
Scott Wilson, CEO of $717-million SeaComm FCU in Massena, N.Y., recently told CUToday.info he also believes a labor shortage will continue to be among the biggest issues with which CU leaders will have to deal.
“I think the real issues we are facing going forward is that there will not be enough labor,” said Wilson. “Businesses of every size are looking for employees. In general terms, that will be an issue that may impede the overall economic recovery.”
Peterson agrees, but emphasized she believes the shortage will be most acute in entry level positions, IT, and mortgage lending.
“Other areas will be alright,” she said.
Nevertheless, she emphasized UWCU will be doing more than advertising a good wage to attract talent. She said the organization will be stressing the complete work package, which includes benefits and remote working opportunities.
“I think coming out of the pandemic more people are looking for work-life balance,” she said.