5 Questions to Ask Regarding the Impact of U.S. Migration on Your Credit Union
North American Migration Map - An infochart by the team at North American Van Lines
Source: North American Moving Services
COVID has only hastened some Americans’ moves out of cities, seeking a less expensive home because they’re now working remotely or escaping the population density that the pandemic seems to thrive in. One might say this is only a temporary situation, but much deeper systemic issues have persisted for decades or more that have led to longer term trends.
These changes can have significant effects on credit unions that require strategic, long-term solutions. Changes like:
Demographics of all types
Knowledge of/Attitudes toward credit unions
General consumer financial stability
Size/Diversification of fields of membership
Secondary cities – those that aren’t the biggies, like NY, LA, Chicago – are popping up all over the south. The Wall Street Journal recently ran a story about families “flocking” to the Nashville, Tenn., suburbs for lower taxes and southern charm. “With low taxes and relatively low home prices, when compared on a national level, people from New York, Chicago and L.A. see a lot of value,” says Cindy Stanton, principal broker of Parks Real Estate in Brentwood, the article reads.
Similarly, businesses are searching for greener pastures – late in 2020 and within weeks of each other, tech behemoths Oracle and Hewlett Packard both announced they would be moving their headquarters from the high-priced Silicon Valley for Texas. According to The Center Square, Texas has been the top choice for California businesses to move to escape exorbitant taxes, property values and more. The article quantified that by stating that approximately 660 companies moved 765 facilities from California to Texas between 2018 and 2019 alone.
Along with the companies go many jobs – or members who have the option to move with them, not to mention a good chunk of the tax base that helps fund high-tax states. And what does that mean for credit unions’ tax status on state or local levels?
The top five outbound states in 2020, according to NorthAmerican Moving Services were:
Illinois
New York
California
New Jersey
Maryland (My home state, which we plan to flee for North Carolina after our younger child graduates high school.)
The Top inbound states included:
Idaho
Arizona
South Carolina
Tennessee
North Carolina
More specifically, MSAs Americans were leaving in 2020 were:
New York City
Anaheim, Calif.
San Diego
Chicago
Riverside, Calif.
And they’re heading for:
Phoenix-Mesa, Ariz.
Houston
Dallas
Atlanta
Denver
Certainly in the Northeast, we can escape the harsh winter weather, but Old Man Winter isn’t the only thing taking our green. Depending upon what you earn, New York State charges income taxes anywhere from 4% to 8.82%, according to NerdWallet, and California’s can go as high as 12.3%. New York City’s property tax rates can exceed 21%, and corporate taxes reach up to 9%!
It’s no wonder businesses and average Americans are running into the arms of Southern hospitality and tax treatment. (And I’m not even going to get into vast difference in property values.)
In light of these relatively few, yet critical factors I have outlined that can have a major affect your credit union, we must be observant, analytical, strategic and proactive in addressing the concerns that may arise. Even for credit unions fortunate enough to be located in areas where more and younger Americans are migrating to, your leadership must prepare to be able to serve the influx of new potential members and serve them well.
Questions for your credit union:
What is the political climate at the local, county and state levels?
Is our field of membership appropriately sized and diversified to thrive?
Is your credit union investing enough in technology to ensure seamless member service – no matter if they move away or not?
Are your branches 1) more or less necessary; 2) appropriately located; and 3) responsibly sized and outfitted with technology?
Finally, the deepest question: Why does all of this matter to my credit union?
Leadership – boards and executives in concert – have a duty to ask all of these questions and more on how what’s happening in the larger scheme of things will impact the credit union. And then follow up each with, Why does this matter? Why is this important? What happens if we don’t do X, Y and Z? Why would we not do A, B and C? Why? Why? Why? Like a four-year old until you reach the heart of the matter.
Each and every credit union leader has daunting and profound responsibilities to their members, first, and the cooperative credit union community as a whole, to not only survive but thrive. Don’t be the last Sears credit union, washed out by lack of preparation for the obvious. Be the next financial services provider of your members’ dreams.
