Post-Pandemic Loss Recovery: What Every Credit Union Must Know– A 3 Part Series
PART II – Take This Job and Shove It!
Part I of this series,“Managing Consumer Financial Vulnerability” focused on the vulnerability of past-due and charged off Credit Union member-borrowers. Delinquent credit obligations, whether they were charged off prior to or during the pandemic, have become increasingly subordinate to the immediate financial needs of individuals and families, and those needs have significantly changed.
Here we will focus more closely on a key driver of change: employment. Ironically, employment itself has been the subject of significant disruption. Many consumers are struggling to find a balance between remote and onsite work, driven in many cases byconflicting employer requirements and whether their children are in school or at home. Others are victims of prolonged unemployment, particularly in the restaurant, retail and service industries. Yet many others are simply quitting their jobs at a record pace.
A Counter-Intuitive Paradigm Shift
As if consumer financial worries and related mental health issues aren’t enough to challengetraditional collection practices, there’s this thing called “The Great Resignation.” “We’ve all seen signs in front of shops, restaurants, and factories: ‘we’re hiring!’ ‘Help wanted!” And now, the Omicron variant is taking a toll on the already depleted workforce… well over 20 million people quit their jobs in the second half of 2021. Some are calling it the ‘big quit,’ others ‘the great resignation’…In all, the highest ‘quit rate’ since the government started keeping track two decades ago. At the nationwide level, the number of Americans quitting their job is higher than ever. We can see what sectors people are quitting. Retail sectors and hospitality sectors. It may not just be worth it for some folks. Andso in some cases people are quitting and they’re not yet returning. They’re taking a break. Americans are burnt out. I like to think of it as it’s a ‘Take this job and shove it,’ measure. It’s just a sign of people saying, ‘you know, I don’t need this.’” [1]
The surge in quitting in recent months — along with the continuing difficulty reported by employers in filling openings — underscores the strange, contradictory moment facing the U.S. economy after two years of pandemic-induced disruptions. The reasons for quitting or dropping out of the labor force are quite varied. The top reasons cited by experts continue to be lack of adequate childcare and health concerns about Covid, now exacerbated by the Omicron variant. And while the framing of the Great Resignation places some emphasis on the idea that even knowledge workers are quitting from burnout or a sympathy with the budding anti-work movement, there are just as many reasons to suspect that many quit in search of better work opportunities, self-employment, or simply, higher pay. Tellingly, some industries are seeing higher rates of quitting than others – leisure and hospitality, retail and healthcare being among the most affected.”[2]
The number of Americans quitting their jobs is the highest on record, as workers take advantage of strong employer demand to pursue better opportunities. More than 4.5 million people voluntarily left their jobs in November, the Labor Department reported. That was up from 4.2 million in October and was the most in the two decades that the government has been keeping track.
Much of the discussion about the increase in quittinghas focused on white-collar workers re-evaluating their priorities in the pandemic. But job turnover has been concentrated in hospitality and other low-wage sectors, where intense competition for employees has given workers the leverage to seek better pay. While for some workers, the rush to reopen the economy has created a rare opportunity to demand better pay and working conditions, for those who can’t change jobs as easily, or who are in sectors where demand isn’t as strong, pay gains have been more modest, and have been overwhelmed by faster inflation.[3]
Now, as the average cost of commuting to work increased nationwide and exceeds $4 per gallon in several states, the Fed has announced plans to increase interest rates.The inflation rate hit 7.0% annually in December, the highest rate since 1981.New and used car and truck prices are still climbing, due to high demand and the shortage of computer chips that go in new vehicles. Food prices are still rising at a strong rate, with....-->
PART II – Take This Job and Shove It!
Part I of this series,“Managing Consumer Financial Vulnerability” focused on the vulnerability of past-due and charged off Credit Union member-borrowers. Delinquent credit obligations, whether they were charged off prior to or during the pandemic, have become increasingly subordinate to the immediate financial needs of individuals and families, and those needs have significantly changed.
Here we will focus more closely on a key driver of change: employment. Ironically, employment itself has been the subject of significant disruption. Many consumers are strug...