Industry Trends: Human Capital (1Q20)

A decade of economic expansion created record-low unemployment levels, driving credit union employee compensation to the highest rates on record. Early outcomes from the COVID-19 crisis indicate changes to the status quo.

Lockdowns and quarantines forced many businesses to close their doors, leaving employees without a job. Total U.S. unemployment reached 4.4% in March up from 3.5% in December. This is the first time unemployment increased during the first three months of the year since 2009, and jobless totals have since skyrocketed even further. Total U.S. worker compensation grew 2.8% year-over-year with increases coming more from salaries which were up 3.1% than from benefits which were up 2.1%. Workers deemed essential are maintaining solid income, but nonessential employees face unemployment and financial uncertainty. Based on first quarter data, the credit union industry avoided most of the employee attrition seen throughout the nation.

Key Points

  • Credit unions had 304,600 full-time employees on their payrolls as of March 31, 2020. That’s up 3.4% annually. The number of part-time workers declined 4.8% to 23,800.
  • Annualized compensation per credit union full-time equivalent employee (FTE) grew to a record $84,000. Salary and benefits per FTE was 6.3% higher than one year ago, more than double the nationwide growth rate of 2.8%.
  • Revenue per dollar spent on compensation a major gauge of return on expenses fell 4.3% annually to $3.10.
  • Net income per FTE totaled $6,700 during the first three months of the year. That’s a 42.0% decline from last year. Net income across the industry fell 40.0% from this period last year.

FULL-TIME AND PART-TIME EMPLOYEES

FOR U.S. CREDIT UNIONS | DATA AS OF 03.31.20
Callahan & Associates | CreditUnions.com

Although employee growth fell compared to the first three months of last year, credit unions did not report the decline in workforce experienced by many U.S. industries as of March 31.

SALARY & BENEFIT EXPENSE PER FTE

FOR U.S. CREDIT UNIONS | DATA AS OF 03.31.20
Callahan & Associates | CreditUnions.com

Credit unions finished the first quarter on pace to spend over $84,000 on average annual compensation per employee. This is the first time this metric has surpassed $80,000.

YTD NET INCOME PER FTE

FOR U.S. CREDIT UNIONS | DATA AS OF 03.31.20
Callahan & Associates | CreditUnions.com

Year-to-date net income per employee fell by nearly half from totals reported in the first quarter of last year.


The Bottom Line

A decade of economic expansion created record-low unemployment levels, driving credit union employee compensation to the highest rates on record. However, COVID-19 has caused economic growth to slow even as compensation costs remain. Although per employee revenue generation fell in most major metrics, employees are having no problem generating loans: per employee originations reached a first quarter high of $442,470.

*FTE=Full-time Equivalent=100%FT + 50%PT

Without official data from the NCUA, Callahan is reporting first quarter data trends from institutions that represent 99.7% of the industry’s assets.

This article appeared originally in Credit Union Strategy & Performance. Read More Today.

June 30, 2020

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