Disney is one of the latest major companies to announce plans to raise starting wages for some employees to $15 per hour, but one employer that won’t be following suit is Partners Federal Credit Union, which was chartered to serve Disney employees.
“Our own staff are not impacted by these wage increases at Disney since the roles they perform for the credit union fall into a different job family than a [Disney] ‘cast member’ working on an attraction, for example,” explained Mike Terzian, EVP and chief member services officer at the $1.7 billion-asset credit union. “Additionally, we continually benchmark our compensation to the financial services industry in order to ensure we provide equitable and competitive wages to our own staff.”
With more and more states mandating higher entry-level pay, some businesses are attempting to get out ahead of the pack by raising wages before they go up statewide – a move that places credit unions in the potentially awkward position of whether to follow the lead of the select employer groups they serve.
Along with Disney, Amazon also recently announced plans to raise its base wage. Amazon is a select employer group for First Tech Federal Credit Union, but representatives of the CU did not respond to interview requests regarding whether they have plans to follow Amazon’s lead.
While credit unions chartered to serve a particular company share no direct connection to that firm’s operations, one analyst said it’s not unreasonable to expect that wages at the CU might follow those of the primary SEG.
Michael Becher, VP of Industry Insights, Inc., which conducts compensation research for CUES and other groups, said if a credit union’s primary employee group saw an increase in pay, there would be “some expectations” from credit union employees themselves for a higher wage.
“A caveat to this is that I am not sure how the credit union employees would be aware of the primary group’s wage increases, and I don’t think it is much different than employees expecting pay increases when an economy is bullish or if a company is doing well,” Becher said.
Partners FCU representatives did not disclose how many of its members work for Disney, though it is chartered to serve the cast, employees, “imagineers” and family members of the Walt Disney Company and its affiliates. “Imagineers” comprise the research and development arm of Disney -- they who creation, design, and construct Disney theme parks. “Cast member” is a generic term for Disney park employees.
The state of California currently has a mandated minimum wage of $10.50 or $11 per hour, depending on the size of the company. Partners FCU, Terzian said, compares its salary ranges to the financial services industry as a whole, and the credit union “regularly exceeds the regulatory requirements.”
Bigger paychecks, bigger business
Pressures of how to respond to SEG wage increases aren’t unique to CUs serving high-profile global companies.
David Misner, a spokesman for the $5.3 billion Pennsylvania State Employees Credit Union in Harrisburg, Pa., told Credit Union Journal that while PSECU provides credit union membership as an employee benefit for its Select Employee Groups, “we are in no way involved in those entities’ salary or wage policies.”
Similarly, base pay at VyStar Credit Union in Jacksonville, Fla. is pegged to talent and demand rather than external forces, explained Robert L. Davis, chief human resources officer at the $7.7 billion-asset institution.
“If there is a scarcity of skilled talent, an employer will eventually have no choice but to raise their wages in order to be competitive with the wage changes taking place around them,” David said. ”If the employer does not require that their applicants have the same or similar skill sets, they may chose not to increase wages for certain jobs.”
One credit union, however is touting the benefits of boosting its starting pay.
According to online salary research site Glassdoor, starting wages for employees at the university – which the credit union is chartered to serve – are around $10 per hour.
Since raising its minimum wage, the credit union’s workforce has expanded and turnover has declined, explained Pam Peterson, director of human resources and organizational development at the $2.7 billion-asset institution. UW Credit Union’s total number of employees has increased from 538 in August 2017 to more than 605 today, while turnover declined by about 4 percent between August 2017 and August 2018. Moreover, the credit union has already received more than 5,000 job applications for the year – a 6 percent increase over total applications for 2017.
Peterson said that because UW CU has already “aggressively increased” its foundation wage, there are no plans to raise entry-level pay in 2018, though “we are watching the labor market closely and will re-evaluate this in 2019.”
Keep your eyes open
While Partners FCU doesn’t have plans to raise wages alongside Disney, Terzian said the credit union will still be impacted by the move.
”With the change in wages, we see it as an additional opportunity to provide financial education and guidance, as well as a time to meet individually with each member in order to create a plan that will help them achieve their respective goals,” he said.
Industry Insights’ Becher said credit unions should be carefully monitoring wage trends not just at the national and local levels, but at SEGs.
“If times are really good, [CUs] may decide to share the wealth with employees or they may decide to expand or hire new employees,” he said. “When times are tough, they may have to cut employees or freeze pay. It is all a business decision.”
