How Credit Unions Meet The Jobs Challenge

Credit unions can meet the collective goal of supporting more than 1 million jobs this year.

 
 

The U.S. unemployment rate was stuck at 9.1% in August, with 10 states and Washington D.C. topping 10%, making job growth the number one topic of conversation last week. Last Thursday, President Obama announced his American Jobs Act before a joint session of Congress and called on lawmakers to “pass this jobs plan right away.” Republican presidential hopefuls sparred over who had a better solution and track record for generating job growth during Wednesday’s Republican Debate. NPR ran a “Jobs Week” package of feature storie on its MarketPlace programming focusing on the plight of America’s unemployed. There has been ample media coverage on unemployment, but still little improvement or activity in resolving it.

Jobs are crucial to the economy and job creation is a win for all. So how do credit unions meet this national public policy priority? Is this another way that the tax exemption can be put to work for members and the communities served by credit unions? How are credit unions connecting their membership directly to job opportunities?

The Credit Unions and Job Creation, Mid-Year 2011

There are at least three direct ways credit unions create jobs that can be estimated from the available data: through direct employment, through payments to third parties for products and services and through financing of homes and autos, products that have specific employment estimates for production.

Each of these components of job support show that credit union supported hundreds of thousands of jobs by the second quarter of this year. Credit unions employed 223,660 full-time employees and 31,508 part-time employees for direct employment of 255,168 employees, according to Callahan & Associates' Peer-to-Peer data. The average annual salary and benefits continued to rise through the second quarter of $60,529 per full-time equivalent employee.

Credit unions spent more than $7.7 billion on office operations and professional services. These payments to third-party firms supported another 127,327 jobs, assuming the average salary and benefit number for FTEs at credit unions.

Just the Beginning

Credit unions also have a critical role in financing businesses. Nevertheless, this role is vital, was recognized by former FDIC Chairman Sheila Bair, who left the position when her five-year term expired in July, in her speech:

“A recurrent thread that runs through U.S. political and economic history is antipathy towards undue concentrations of economic and, especially, political power. Accordingly, ours is a system where institutions can be … chartered in a variety of sizes and institutional forms. This is a system in harmony with the entrepreneurial character of the U.S. economy, where more than two-thirds of new jobs are created by small businesses. Small businesses tend to seek credit at community institutions who understand the local economy and also make decisions locally.”

Credit unions are increasingly seen as the critical source of local financing for small businesses and their customers. This gathering of local funds are reinvested back into communities making it a key part of the economic vitality for thousands of “micro-economies.”

“Big banks like big deals,” Bair’s speech continues. “If we wish small deals to get a fair shake, then we need small banks having financing relationships measured in thousands of dollars rather than in millions.”

Connecting Members and Employers

Credit unions across the country are going one step further and helping members in need connect directly with employers through job fairs. In today’s blog, Mona Joseph, AVP for business development at WestStar Credit Union, describes two job fairs her credit union organized in January and March in hard-hit Nevada.

We ran a blog post about WestStar in April and Kathleen Quinn of $13M Glenview Credit Union posted a comment about her credit union’s similar efforts. “Although our CU is much smaller, we have also created a job connection for members,” Quinn wrote. “We have job opening info in our lobby and an email ‘tree’ where we are sending members updates to local job fairs and openings.”

U.S. Community Credit Union ($135M, Nashville, TN) is also trying to address unemployment, but for a demographic hardest hit with unemployment: high schoolers. They trained 10 high school seniors over the summer in traditional credit union branches, then opened a student-run branch at McGavock High School. According to an August 16 article in The Tennessean “the program strives to prepare students for college and careers by combining class work and hands-on projects.”

More than an Opportunity: A Duty and a Collective Goal

Credit unions have more than a commercial opportunity in multiple job creation efforts. Jobs are now the priority. Shouldn’t credit unions set a collective goal of supporting more than 1 million jobs in 2011? Such a public goal would not only create awareness among the markets that credit unions serve, but it would also show the public the awareness cooperatives feel of their obligation to a broader public purpose.

**This article was updated to note that Sheila Bair's term as chairwoman of the FDIC expired in July. The original version of this article was printed in the May Callahan Report when she was still chairwoman.

 

 

 

Sept. 12, 2011


Comments

 
 
 
  • As is normal -- Chip is right on target noting the responsibility of credit unions to support job growth and small business through a greater involvement in small business lending. Participation in government guaranteed loans through the Small Business Administration and USDA programs are a safe venue for credit unions to enter this market and fulfill their responsibilities to support small business and job growth in America.
    J. Alan Pughes