The federal minimum wage stands at $7.25 per hour, but recent credit union actions – along with a broader national movement – are helping to push that figure higher.
Earlier this year, Coastal Federal Credit Union, a $2.8 billion institution based in Raleigh, N.C., announced that it will hike its minimum wage for employees to $12.50 per hour, whether they work full-time, part-time or on a temporary basis.
"The living wage rate for a single person in our marketplace [Wake County] to avoid poverty is $11.09 per hour," said Coastal FCU's president and CEO, Chuck Purvis. "As a responsible corporate citizen, we felt it was time for Coastal to take the initiative to help our employees."
Joseph Mecca, manager of marketing strategy & communications at Coastal FCU, explained that Coastal engineered the increase out of a desire to "ensure that even our newest and lowest-paid employees could afford to live comfortably. While we based our number on Wake County statistics, many of our employees live in [other North Carolina] counties with [even] lower living wages, so they're able to stretch a paycheck even further."
But Mecca concedes that the new policy will only impact a handful of its employees. "It primarily helps tellers who came to Coastal as part of
Moreover, moving up the lowest levels of the pay scale will not lead to higher wages for everyone else, he noted.
In addition, effective Jan. 1, 2017, Coastal FCU will eliminate almost half (20) of its member account fee schedule – thereby foregoing about $600,000 in annual revenue.
Mecca indicated that the fee eliminations will have the "larger impact" than the minimum wage increase. "We expect it to be another decision point that will help us continue to attract new business and generate revenue to offset whatever we'd lose from not charging those fees," he added.
Looking ahead, Mecca doubts that the state of North Carolina will boost its minimum wage in 2017. "It doesn't seem to be a high priority for our General Assembly," he said. "And while our new governor [Democrat Roy Cooper] is more likely than his predecessor [Republican Pat McCrory] to push for it, he'll have difficulty getting his own agenda [passed]."
More University CUs Sign On
Coastal FCU follows in the footsteps of University of Wisconsin (UW) Credit Union, a $2.3 billion institution based in Madison, Wisc., which announced last summer that by September 2017, it will boost the
Another university credit union, Notre Dame Federal Credit Union, a $488 million institution based in Notre Dame, Ind., just hiked its minimum wage to $13.50 per hour. That increase will go into effect in February 2017, and along with that the credit union is set to eliminate its two-tier system for paid time off (PTO) for exempt and non-exempt partners. Consequently, hourly workers will accrue the same PTO benefits as their salaried and management employees.
"This change represents a significant compensation improvement for our partners," said Notre Dame President and CEO Thomas J. Gryp. "This wage and PTO adjustment simply acknowledges how invaluable our [employees] are to our members and to the overall success of our credit union."
National Movement
Meanwhile, across the nation, activists are seeking to raise the minimum wage to $15 per hour, more than double the current federal minimum wage. But some action is already taking place at the state level.
During 2016, New York passed a law that calls for raising the minimum wage to $15 per hour by the end of 2018. Washington D.C. then enacted a law to raise the minimum wage in the District of Columbia to $15 per hour by July 1, 2020. California also recently passed legislation to increase the minimum wage to $15 per hour by Jan. 1, 2022, for organizations that employ 26 or more people; For those employers with 25 or fewer workers, the minimum wage will reach $15 per hour by Jan. 1, 2023. And voters in Arizona, Colorado, Maine and Washington have also passed measures to raise their respective minimum wages. Arizona, Colorado, and Maine will incrementally raise their minimum wages to $12 an hour by 2020. Washington's minimum wage will be increased incrementally to $13.50 an hour by 2020.
Questions remain, however, about how President-elect Donald Trump and the Republican-controlled Congress will prioritize raising the federal minimum wage.
Coastal FCU's Mecca noted that, for the moment, 29 states have minimum wages that are already higher than the federal minimum. "And several of those [states] have automatic adjustments in place, so I don't think a Trump presidency will influence much on a state-by-state basis," he added.
John Bratsakis, president and CEO of the MD|DC Credit Union Association, said there is "clearly a national trend" toward establishing a $15 minimum wage. "Here in the Washington metro area, credit union employees working full time, generally speaking, are already making above the current minimum wage," he said. "As the District [of Columbia] continues to phase in its $15 minimum wage, credit unions will be looking at any potential impact and the possibility that some salaries will have to be re-aligned to correspond with a higher minimum wage."
As an association, Bratsakis added, MDDCCUA is "closely watching" the developments in other states and metropolitan areas on the minimum wage issue "to keep our member credit unions informed."
Paul Guppy, vice president for research at the Washington Policy Center, a Seattle-based public policy think-tank, also does not think Trump's presidency will have much effect on whether states raise their own minimum wages. "That policy change is usually determined by in-state political dynamics," he observed, adding that the power labor unions wield in various state legislatures can have a significant impact on minimum wage discussions.
Guppy suggested two factors are in play when considering which states might hike their minimum wages. "First, I think a state is more likely to raise its minimum wage if it is a 'blue' state, according to the results of the last [presidential] election," he said. "Second, states that are not 'right-to-work' states are more likely to raise their minimum wage because unions are much more powerful in these states."
What Will CUs Do?
Brian Turner, president and chief economist at Meridian Economics LLC, believes that it would be an "uphill battle" to achieve a $15 per hour minimum wage, although it is "very reasonable" to expect a $10 per hour wage – something that President-elect Trump has supported in the recent past.
"One of the alternatives that Mr. Trump has suggested is an expansion of the Earned Income Tax Credit to include a provision that offsets child-care expenses," Turner said. "That would most benefit the single-family parent households that the Democrats have targeted with their minimum-wage message. It's also favored by a large number of economists, because it would be based on a family's income, not tax liability. It also shifts the boost in pay to the tax code instead of [upon] the employer."
But will more credit unions enact a minimum wage – either for $15 or some other level appropriate to the markets they serve?
Andrew Downin, managing director of research at the Filene Research Institute, thinks they will. "This fits into the credit union movement's philosophy of 'people before profits,'" he said. "Also, it is becoming increasingly critical for credit unions to attract, develop and retain top talent. From a purely competitive standpoint, many credit unions may look to higher pay and benefits as a way to stand out from other employers."
Notre Dame FCU's Gryp said that he hopes more financial institutions reevaluate how important their lowest paid employees are to the success of their organizations.
"Wouldn't it be nice if more private sector businesses were proactive in taking care of their employees?" he asked. "If that was the case, the minimum wage would be irrelevant, regardless of where it was set. Hopefully the trend of businesses raising the minimum wage for their employees will continue, creating the market pressure to improve wages without government intervention."
