Seventy-six percent of American workers live paycheck to paycheck, according to Bankrate.com. If that doesn’t concern you, it should—whether you think it’s an indication of the job market’s modest-at-best recovery from a deep recession, or the poor state of consumers’ financial literacy and money-management skills.
It’s a simple statistic created by an array of complex factors, but it’s the latest evidence of the perilous financial condition of millions of American households today. Consider also the pathetic state of personal retirement savings in the age of the disappearing pension, and excessive amounts of student debt that’ll haunt young people their entire lives because education costs have skyrocketed beyond the rate of inflation.
The once-great American middle class is hollowing out. The majority of jobs created today carry low wages and few if any benefits.
There’s no shortage of troubling data:
►Men’s wages have been flat since the late 1970s;
►Women’s wages have been flat for a decade and a half;
►Household net worth is disturbingly low; and
►Grossly underfunded 401(k) plans are now the primary retirement vehicle to supplement Social Security.
Throw atop the pile the ongoing debate over how to “fix” Social Security, which generally concerns raising the retirement age or cutting benefits.
Congress’s plan to review and change the inanely complex American tax code is equally disturbing. For the purpose of analysis and debate, discussions will begin with “a blank piece of paper.” All existing tax exemptions, including the credit union exemption, are under consideration.
You might think the current, dysfunctional Congress is incapable of agreeing on anything except picking a national pastry and naming post offices. There are those who say there’s little to worry about. They are wrong.
Even if Congress dithers, and argues, and postures, and does nothing as the midterm 2014 elections approach, the credit union tax exemption is always at risk.
Banks have waged a 100-year war against credit unions. They take the long view. The great legislative victory in 1998—preserving credit union membership—came after years of fighting a bank-funded lawsuit that ultimately ended up in the U.S. Supreme Court. We lost. But we were prepared, with a growing line of Congressional sponsors backing pro-credit union legislation. We brought thousands of members to D.C. to lobby.
We won that battle. But we also paid a price. Two of the more aggravating issues credit unions deal with today—the cap on member business loans and prompt corrective action—were necessary compromises to preserve Americans’ rights to belong to a credit union. You live to fight another day.
U.S. credit unions were born out of the economic and social insecurities of the late 19th and early 20th centuries. Industrialization, immigration, and urbanization changed the face of our economy, the nature of work, and the financial security of households. Trends that helped make America the great nation it is today were also disruptive and frightening for many. Credit unions were a necessary response to these trends, culminating with the Great Depression and the 1934 passage of the Federal Credit Union Act.
Remove the tax exemption, and you change the essence of who we are—people placing service above profit, and institutions helping foster a half-century of U.S. economic growth and financial security.
Given the many challenges households and individuals face today because of the aforementioned trends, only the greedy and misinformed believe it’s a good idea to restrict or change the credit union business model.
We all need to roll up our sleeves and get aggressive once again. History is full of poor assumptions that killed one industry or another. This is not the time to assume this latest threat will just go away.
MARK CONDON is CUNA’s senior vice president, business and consumer publishing.
For information about how to preserve the credit union tax exemption, visit CUNA's Don't Tax My Credit Union website.