Credit Unions Hammer Away At Unemployment

Job fairs, management training programs, and loan relief benefit local employment rates.

 
 

Many sectors of the economy are improving — such as consumer spending, home prices, and  new  housing starts — but high, although improving, unemployment rates continue to dampen economic recovery in many regions of the United States.

While the U.S. unemployment rate dipped below 8% in September, according to the U.S. Bureau of Labor Statistics, some states are still showing persistently high rates. California, Nevada, and Rhode Island were among the states with the most dire joblessness rates — 10.2%, 11.8%, and 10.7%, respectively. Although employment is improving, it is still far from pre-recession levels.  Unemployment weighs on all aspects of a local economy: with no income, job seekers are in no position to increase spending or take out auto loans or mortgages.

Like many businesses, few credit unions can afford to hire at a rapid clip. But they are still serving members in need of income in other ways. For example, credit unions have been working diligently with members who can’t keep up with their monthly bills because off layoffs off or other income reductions.

Short-term loan benefits like those offered by Penn East Federal Credit Union in  Pennsylvania have helped ensure local residents suffering from pay cuts stay in financial health. California’s First Financial Credit Union recently started a management programs aimed at incoming young interns to ensure Gen Y employees have a better shot at a successful career. And job fairs, like the one WestStar Federal Credit Union sponsors for the Nevada gaming industry, offer community members a chance to connect with stable employers.

Loan Relief Aids Struggling Members

Back in July when unemployment hovered at 7.9%, the City of Scranton (PA) reduced the salaries of nearly 400 public employees — including police officers, fire fighters, and the mayor – to minimum wage, or $7.25 an hour. The city eventually reversed the controversial decision and restored workers’ full pay. Regardless, when the city first announced the summer cuts, both Penn East FCU ($136.8M, Scranton, PA) and Tobyhanna FCU stepped up with special loan offerings and waivers to help members weather the unexpected financial setback.

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Penn East FCU, which has two branches in Scranton, hustled to offer members and nonmembers three options to help ease their financial burdens. Public employees could apply for what the credit union called a “salary continuation loan” that offered 0% APR and no payments through Sept. 28 to qualifying borrowers. It also offered refinancing on auto loans, also for 0% APR and no payments through Sept. 28. That loan included 1% cash back, up to $100, at closing.“We’re a credit union, and we like to help people that might not be getting help from other sources,” says Katelyn McManamon, marketing and business development manager of Penn East FCU. “You can’t survive this day and age on minimum wage. It happened so quickly that there was no time to plan for it.”

In all, approximately 30 members took advantage of those two loan offerings. And the credit union allowed members who had auto or personal loans to skip a payment without incurring the normal $30 charge. Nearby, Tobyhanna FCU ($165.4M, Scranton, PA) offered the community similar relief with a two-month loan holiday for members who were city employees.

 “That’s the great thing about being a credit union — you can be flexible,” McManamon says. “If you see a need, you can address it immediately instead of having to go through this whole rigmarole. We saw a need and addressed it.”

Management Training Offers Gen Y Career Hope

Other credit unions are taking a more methodical approach in dealing with unemployment issues.  In California, First Financial FCU ($449.2M, West Covina, CA) launched a management training program to integrate Gen Y into management positions. The program, which boosts the credit union’s talent pool with fresh perspectives as it absorbs recent college graduates, has resulted in five new hires.

“We’re thrilled and excited to be able to offer something like this to recent grads,” says CEO Carlton Musmann. “As a senior [they’re] trying to figure out what they’re going to do with the unemployment rate so high.”

The one-year management training program called Polu Nalu, which means “Blue Wave” in Hawaiian, opened in July and drew recent graduates from the University of Southern California, University of California at Berkley, University of California at Riverside, and University of California at San Diego. The new hires rotate through each of the credit union’s 16 departments before they take a permanent position, which could be assistant branch manager or even branch manager.

In any organization that has a sales and service culture, the skill set required to be successful prior to 2008 is different from today’s economic environment, where employees now need to be more proactive, Musmann says. Placing fresh-out-of college employees into management positions gives the credit union an opportunity to train someone who has not adapted to an outdated culture, someone who can absorb new priorities like a “kind of sponge.” For recent grads, the selection process opens management opportunities to a generation grappling with the most severe unemployment rates.

The comprehensive program requires little additional cost, but each department must take extra time to guide the new hires and budget their time. Every department in the organization has to develop a curriculum so the new employees receive training that’s valuable not only to the departments but also to the employees’ work experience. Those tapped for the program don’t necessarily need to prove financial experience, just a strong work ethic and an ability to learn quickly. As trainees, they learn about finance and accounting, which is essential in credit union management, as well as more operational aspects such as job functions.

“We get to train them the way we want to,” Musmann says. That includes instructing them on how to adapt to the credit union’s culture and member service.

First Financial FCU is hailing this management program as a “fresh and innovative” approach to hiring. It plans to continue the program annually and grow it to accommodate up to 10 new hires in the next few years.

“It’s a long-term investment,” Musmann says. “ It serves not only them, but us, too. They’re infusing a lot of new ideas and a fresh approach, and it’s been reinvigorating.”

Job Fairs Unite Employees To Work

Sponsoring large-scale job fairs is another way credit unions are chipping away at local unemployment problems. In Las Vegas, NV, a state where unemployment rate is the highest in the nation, WestStar FCU ($136.8M, Las Vegas) has been working with the gaming industry to fill open positions at hotels, casinos, and restaurants in both Las Vegas and Reno.

At the last job fair at Rio All-Suites Hotel and Casino, job seekers began lining up at 5 a.m. Organizers, including co-sponsor Ceasars Palace, had expected 5,000 people, but nearly 7,000 attended. The fair had to turn away eager applicants due to overcrowding.

WestStar FCU does not market at the events. According to CEO Rick Schmidt, the credit union holds the job fairs strictly to fill a community need and to give members an opportunity to regain employment. WestStar plans to continue sponsoring job fairs, which it has been able to do at a reasonable cost.

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» How To Invigorate Your Local Economy
» Small Business Saviors
» Credit Unions Hammer Away At Unemployment
» Credit Unions Soothe Housing Market Woes
 

 

 

Oct. 29, 2012


Comments

 
 
 
  • This is excellent. The topic is prime territory for identifying solutions other credit unions may try to improve their local economies. The real life examples mean more than a chart of statistics. Good job on that! Sadly, one of the reasons unemployment rates have dropped is because there is an onslaught of previous recipients of unemployment insuraance whose benefits have expired and they have fallen off the charts. Still, there is hope for future growth as we all find our way to a better economy.
    Jane