Meet the new member of modest means

Strange things are going on in the country. Either the American workforce is comprised of a bunch of ungrateful dopes who don’t realize they’ve never had it so good or politicians just don’t want to admit that things aren’t quite as good as they appear. On the one hand the unemployment rate is tumbling, the stock market is booming and we are finally creating new jobs at a record clip. On the other hand, a recent poll indicates that workers are as pessimistic about the economy as they were back in 2008. What gives?

What gives is that an increasingly large number of Americans are being squeezed out of an American Dream that used to be a given. Instead what we have workers who are much richer than their grandparents but in their own way in economic straits as perilous as those we commonly think of as being of modest means.

This is one area where the statistics don’t lie. According to a recent report issued by the Economic Policy Institute, your average American worker, irrespective of education level, will see a decrease in his wages adjusted for inflation this year. This is nothing new. In fact, wage growth has stagnated since the late 1970s.

Judging by the record volume of student loans, more and more people are doubling down on education. This makes sense when one considers that almost 70% of our nation’s job are now dependent on providing services ranging from legal services to fast food as opposed to manufacturing products. The days of graduating high school on a Friday and starting work at the town mill on a Monday are over. Just look at the number of SEG conversions to get a sense of how dramatic that shift has been.  The problem is that while a college education is still a valuable asset it is no longer a guarantee to middle class success. This is particularly true when you consider the impact that student loans have on spending patterns. Already we are seeing signs that many college graduates, who a generation ago would have been anxious to buy their first house, are delaying these kinds of major purchases as they pay back college debt.

One more depressing fact, economic mobility so typical of the Greatest Generation courtesy of those closed down mils, a lack of economic competition and the GI bill is fast becoming a relic of the past. Today there are many European countries where there is greater economic mobility between classes than there is in the United States.

The economic obstacles faced by our members today are different, but in many ways more daunting, than those faced by the persons who started credit unions in the 1930’s and 1940’s. Are your members with good jobs, nice houses and every intention of sending their kids to college people of modest means in a traditional sense? No, but they are the first generation facing the possibility that they may not do as well as their parents and whose kids are going to have to fight to stay on their rung of the ladder. In addition, the defined benefit pension has been replaced by the defined contribution, Economic insecurity is an ever present fact of life for all but the most successful. In contrast, helping the first generation immigrant save so that his kids were assured a shot at a better life or making sure the Irish, Italian, or African-American factory worker had a financial institution that would accept his money were steps that could get people headed towards a better life. We used to be one of the world’s most upwardly mobile societies, but not anymore.

Credit unions have to serve this new “modest means” demographic while continuing to help those most in need of financial help. Most importantly, credit unions can help ensure that America doesn’t end up with a bifurcated financial system, where the affluent are given access to high end financial services and everyone else is trained to aspire to nothing more than a reloadable pre-paid debit card.  Such services are a perfectly appropriate way to get started managing money but if we want people to save for a child’s education or a first home, they need to be encourage to open up an account.

A second way credit unions can provide help to the new people of modest means is to expand the scope of their lobbying efforts beyond traditional banking concerns and include issues that go to the core of our country’s economic stagnation. For example, just as credit unions formed in part as a reaction to the blatant discrimination of banks, it is perfectly logical for today’s credit unions to advocate for common sense tax and education reforms.

Finally, credit unions have to do even more to help people of all ages make the most of the money they have by offering financial education and advice and counseling to people at all stages of careers where economic insecurity is the norm. We not only have to tell the elementary school kid what a credit union is or the member getting her first credit card about the dangers of debt but we have to have advice for the daughter trying to provide care for and manage the finances of her aging parents and the retirees l realizing that not all their debts will be paid when they are gone.  Aside from being the right thing to do, these programs will make it clear to your member that credit unions understand how tough times really are and that we are here to help.