Why Mennonite Savings and Credit Union decided to pay employees above the minimum wage
$964 million/20,451-member Mennonite Savings and Credit Union, with 170 full-time equivalents, is one of 80 employers in its area that have signed on, voluntarily, to pay their employees a living wage. A wage that, says Brent Zorgdrager, CEO of Mennonite Savings and CU in Kitchener, Ontario, is higher than the minimum wage.
“It fits with the values of a credit union in a general sense,” says Zorgdrager. “That was certainly where it was a match for us.” Mennonite Savings and CU, he says, is a very value-based credit union; one of those values is standing for social justice. This movement, therefore, was a direct fit.
“In our province the minimum wage is $11.25/hour and in our region the living wage is $16.05 so the living wage is a premium of $4.80/hour or a premium of 43 percent over the minimum wage,” explains Zorgdrager.
According to Living Wage Waterloo Region, “the living wage is calculated as the hourly rate at which a household can meet its basic needs, once government transfers have been added to the family’s income and deductions have been subtracted.”
Mennonite Savings and CU has also been playing a pivotal role in promoting the concept to others. “We were a part of the starting group,” says Zorgdrager. “I think they’re up to something like 24 employers now and closing in on 1,000 employees who have now had their employers signed onto the concept of a living wage.”
These types of decisions, he says, are best served when they spring from firmly held values. “What I’ve learned is that if you choose to do something voluntary like we’ve done with our living wage, make sure you commit first to the philosophy strongly and deeply because when you get into the details you’ll find some obstacles.”
While instituting the living wage among full-time employees didn’t represent many challenges, he says, when it came to the part-timers some challenges emerged. Because salary is calculated based on both compensation and benefits, and because part-time employees at Mennonite Savings and CU don’t receive benefits, there was the potential for some part-time employees to receive a higher wage or salary than full-time employees, simply to bring them up to the living wage level. That, he says, had the potential to create some ill-will among employees.
“The credit union was able to avoid ill will by communicating clearly to all staff that part-time staff would be receiving a living wage subsidy to bring them up to the living wage level. Furthermore it was described to staff the fact that part-time staff were receiving this subsidy as a replacement for the value of benefits that full-time staff enjoy. Finally we communicated that as part-time staff got pay increases, they would be neutralized by offsetting reductions to the living wage subsidy,” adds Zorgdrager.
Lin Grensing-Pophal, SPHR, is a freelance writer and human resource management and marketing communication consultant in Chippewa Falls, Wis. She is the author of The Everything Guide to Customer Engagement (Adams Media, 2014) and Human Resource Essentials (SHRM, 2010).