While wages stagnate, health insurance costs continue to rise.
That puts a pinch on employees who are earning the same amount but paying a larger share of their benefit costs.
Last year, credit unions’ health insurance premiums rose 11% on average, with 83% of credit unions paying more in 2012 than they did in 2011, according to CUNA’s 2012-2013 Credit Union Staff Benefits Survey.
And it also challenges credit unions as employers that promote competitive benefit packages and a “best place to work” reputation as selling points to potential employees.
What happens when those benefit packages erode a little bit each year? Or when they start to look like all the other benefit packages out there? At some point, credit unions could run the risk of losing their employee-friendly reputation.
Consider the plight of Tampa Bay (Fla.) Federal Credit Union. It has been four years since the $213 million asset credit union raised salaries. The credit union also suspended its 401(k) match. In 2010, employees lost educational reimbursements as well as any nonsales bonuses.
And in 2012 the credit union, which had previously paid 100% of employee health-care premiums, shifted 25% of those costs to staff. It did maintain its longstanding commitment to pay 50% of dependent premiums.
“The economy has had a huge effect on us,” says Diana Wozniak, Tampa Bay Federal’s human resources (HR) manager, and chair of the CUNA HR/Training & Development (TD) Council.
“Our overall compensation package would appear to be less attractive,” she says. “Suspending salary increases inhibited our ability to fill positions at an attractive rate. So while we could hire new employees, our ability to retain our top performers became more difficult.”
Fortunately, many of the changes aren’t permanent, and Wozniak says the credit union plans to restore some prerecession benefits—except health insurance cost sharing—by 2014.
She’s still happy with the health insurance options available, and she credits strong organizational leadership for maintaining a positive culture and employee loyalty during hard times.
Tampa Bay Federal also increased “soft” benefits, such as denim days—allowing staff to dress down a bit—and it discontinued on-site fund-raisers to eliminate pressures to contribute financially. But Wozniak realizes employers can’t continually ask more of employees without offering anything in return.
“In a larger city like Tampa, we still have to compete with employers that haven’t suffered the difficult economic times as much as we have,” Wozniak says. “Keeping a balance of competitive salary and benefits will be crucial to moving forward. Everyone wants to work for a good organization with a good culture. But employees still have financial obligations to meet and they need comprehensive insurance benefits for their families.”
Benefits as a differentiator
Credit unions think of their benefits packages as a distinguishing feature enabling them to attract top talent and offer an attractive work environment, despite offering slightly lower salaries than for-profit competitors.
“It’s true that credit unions generally pay less than banks, but it’s also true that credit unions often compete for staff by offering quality benefit packages,” says Beth Soltis, CUNA’s senior research analyst, who notes the latter often puts credit unions at the top of many “best places to work” lists.SIDEBAR
Soltis says the “people-helping-people” cooperative culture attracts people willing to accept marginally lower wages for more meaningful work. But rising costs, particularly health insurance premiums, are making it more difficult for credit unions to compete primarily on benefits.
Soltis conducted CUNA’s benefits survey, and says the findings suggest credit unions’ commitment to benefit packages remains strong despite the pressures of the economy and rising health insurance costs.
Eighty-eight percent of credit unions with more than $5 million in assets offer some sort of employee health plan. Of those, 96% offer group health insurance. Those figures have held steady for the past five years, despite the recession.
But one-third of those credit unions are maintaining their offerings by introducing or increasing employee cost-sharing by requiring employees to pay a percentage of premiums or increasing deductibles or co-pays.
Soltis says it’s fair to assume many employees would rather pay more out-of-pocket than lose the health benefit altogether, but she cautions morale might eventually suffer if employees have to contribute more for benefits when wages remain frozen.
At the same time, the ongoing recession and widespread uncertainty over health care—due in large part to the Patient Protection and Affordable Care Act—have put pressure on both ends of the compensation continuum, making it difficult to increase or even maintain either wages or benefits.
Employees have been feeling the squeeze for a few years now, Soltis cautions.
After several years of recession and wage stagnation, shouldering a larger burden of health insurance expenses might be too much to ask.
“If employees are going to pay more, employers might have to give somewhere,” she says. “It’s rough for workers to pay more for gas and groceries and health insurance and lose money in their retirement packages without getting much in the way of wage increases.”
Eventually, Soltis says, credit unions that cut benefits too far could see decreased productivity, increased absenteeism, and higher turnover, particularly among their high-skilled workers. Filling vacant positions will be difficult if neither wages nor benefits stand out in the marketplace.
NEXT: The wellness factor
Over the past weekend, the chairman of CUNA’s System Structure and Governance Task Force, Tom Dorety of Suncoast CU, Tampa, Fla., discussed with the CUNA board some initial models the Task Force is considering. The group has been meeting since last fall and commissioned several focus groups and a nationwide survey of credit unions to gather credit union feedback to inform its deliberations.
WASHINGTON (5/4/15, UPDATED 1:45 p.m. ET)--Building on the success credit union advocates are having in getting data breach legislation introduced in the U.S. Congress, today CUNA launches a new call to action to garner support for the recently introduced House Data Security Act of 2015 (H.R. 2205).