Industry Trends: Human Capital (2Q20)

Unemployment soared to its highest level in more than 70 years, but the credit union industry managed to hold onto their staff members and add to their ranks in second quarter.

America’s lockdowns continued through the second quarter, forcing businesses to close and unemployment to skyrocket. According to the Bureau of Labor Statistics, the national unemployment rate reached 14.7% in April, the highest it has been since1940. As parts of the country re-opened toward the end of the quarter, employment pressures eased, improving the rate to 11.1% as of June 30. Hindered by this workforce displacement, FRED economic data indicates total quarterly compensation nationwidefell below $8.9 trillion as of the second quarter; that’s down from $9.3 trillion in the second quarter of 2019 and $9.5 trillion in the first quarter of 2020.

Key Points

  • Total full-time equivalent employees (FTE)* at credit unions nationwide reached 316,215 as of June 30. That’s an increase of 1.8% year-over-year.
  • Part-time employees decreased 10.0% year-over-year; full-time employees increased 2.3%.
  • Total compensation at U.S. credit unions increased 8.6% annually to $13.4 billion through the first six months of 2020. The average wage per employee increased 6.6% annually to $84,531 as of the second quarter.
  • Revenue per dollar spent on compensation, a proxy measure for the return on investment in employees, decreased 5.9% year-over-year to $3.08.
  • Net income per FTE fell to $15,009 as of the second quarter. This is down from $23,400 through June 2019 due to a 34.7% year-over- year contraction in total net income.

FULL-TIME AND PART-TIME EMPLOYEES

FOR U.S. CREDIT UNIONS | DATA AS OF 06.30.20
Callahan & Associates | CreditUnions.com

Credit unions added 6,972 full time employees over the past 12 months, a 2.3% annual increase, while part-time employees declined 10.0% over the same period.

SALARY & BENEFIT EXPENSE PER FTE

FOR U.S. CREDIT UNIONS | DATA AS OF 06.30.20
Callahan & Associates | CreditUnions.com

Annual salaries in the second quarter averaged $84,531. That’s up 6.6% year-over-year. The average credit union wage was up more than $5,000 per employee over the past 12 months.

YTD NET INCOME PER FTE

FOR U.S. CREDIT UNIONS | DATA AS OF 06.30.20
Callahan & Associates | CreditUnions.com

Year-to-date net income per employee decreased 35.9% year-over-year as credit unions faced earnings pressures associated with COVID-19.


The Bottom Line

Unemployment soared to its highest level since before World War II as the national economy continued to feel the effects of the COVID-19 pandemic. Credit unions managed to hold onto their staff members and add to their ranks. Despite this, downward pressureson interest income underpinned a decrease in employee productivity measures. As loan demand rebounds following the pandemic, the industry will need to rely on employees to continue to support members.

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

This article appeared originally in Credit Union Strategy & Performance.

September 30, 2020

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