By Frank J. Diekmann
This part of the drill I already know; it’s that time of the year when credit unions and individuals alike hit the restart button. There is something invigorating about rebooting, emptying the trash can, making resolutions and beginning anew.
Here’s the part of the drill that worries me--be careful about what you throw out, because you may throwing away the best thing you can do.
The word “new” is very likely attached to your credit union’s 2017 objectives: a new lending program, marketing campaign, internal initiative or a branch. And although I’m sorry to say it, it’s also very unlikely you have among your plans something old: making the kind of differences that are truly meaningful resolutions.
And that’s too bad, because it isn’t so much that something old is new again—it never went away—it’s just more important than ever, and there is no one better positioned than you and your credit union to do something about it.
'Breathtaking,' Yet Not Everyone Is Breathing
The United States has “pumped out breathtaking riches over the last three and half decades, but for half of all Americans, their share of the total economic pie has shrunk significantly,” according to a recent story in the New York Times. Research conducted by a team of economists found that approximately 117 million adults are stuck on the lower half of the income ladder and have “been completely shut off from economic growth since the 1970s. Even after taxes and transfers, there has been close to zero growth for working-age adults in the bottom 50%.”
There is another name for what those economists call the “bottom 50%”: credit union members and prospective members who need their CU’s help. Not a handout, just a ladder they can climb (what puts the cooperative in the co-op is the CU provides the ladder, the member must do the climbing). If you want a real new year’s resolution that will make a difference, that’s more than just a heckuva a good place to start—it’s where you should already be.
The same researchers found that stagnant wages have sliced the share of income collected by the bottom half of the population to 12.5% in 2014, from 20% of the total in 1980. Where did all that missing money go? It’s not missing, and I’m pretty sure you don’t have to guess, as it essentially went to the top 1%, whose share of the nation’s income nearly doubled to more than 20% during that same 34-year period, the Times noted. The researchers found that in 2014 the average income of half of American adults had barely budged, remaining around $16,000, while members of the top 1% brought home, on average, $1,304,800 or 81 times as much.
Just Because It's Easy...
I get it. It’s easy to be enticed by all that money in the top 1% or even 20%. Those premium credit cards and jumbo mortgages and even “wealth management” divisions are a lot less work and boast the kinds of margins that make regulators happy and goose the performance contract bonuses of CU execs and CEOs.
But the people who really, really need wealth management are those who have so very little wealth to manage.
This is one of those uncomfortable topics few like to talk about inside credit unions—hey everybody, look over there, let’s talk political “advocacy–but it deserves to be talked about not just because it’s the right thing to do, but because it’s the right business decision for the long-term health of credit unions (and their members and future members). The advocacy issue that should really be the primary focus of credit unions? Being advocates for the huge swath of America who, were it not for CUs, would have no one there for them at all but huge banks and small, local payday lenders.
Credit unions are fond of saying they are about Main Street, not Wall Street. They’re only partly right. They’re also about Elm Street and Maple Street and every other street and avenue and dirt road on which people are fretting about everything from putting aside a little for retirement, to giving their kids better lives, to finding money to pay the rent and stay on the street for another month.
Win Your Own World Series
Much was made in late 2016 of how the Chicago Cubs had won the World Series for the first time since 1908. Something else took place in 1908, as well: St. Mary’s Bank, America’s first credit union, began operating. It was founded to serve the low-paid workers, many of them immigrants, toiling away in the mills that lined the Merrimack River in Manchester, N.H. The mills have closed, although the buildings remain and are now filled with new types of companies that employ workers who, like their predecessors, are not the 1%.
The Cubs have resolved to repeat as champions of Major League Baseball. In 2017 and beyond, credit unions should resolve to be champions for the consumers who need them more than ever. Because CU members can’t afford to win only every 108 years.
Frank J. Diekmann is Cooperator in Chief at CUToday.info and can be reached at Frank@CUToday.info or followed @FrankCUToday.