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Economy

Guarding Against the $400 Emergency

Contributing Author: John Stephens Executive Vice President EFG Companies
Contributing Author:
John Stephens
Executive Vice President
EFG Companies

The economic picture has certainly looked relatively good for the last few years. Unemployment is at record low levels and companies report continued hiring. However, wages remain mostly flat and the Federal Reserve just issued a quarter-point interest rate hike. A potential trade war could also bring a serious cloud to our sunny economy.

In addition, there lies a very troubling and widening gap in wealth in this country. According to data from the Pew Research Center, the median upper-income family (those who make more than $127,600) now holds 75 times the wealth of the median low-income family (those who make less than $42,500). To give some historical perspective, in 2007 the upper-income family was worth 40 times as much as the lower income family. In 1989, the multiple was 28. To put it another way, the top 1% of US wage earners now holds 38.6% of the nation’s wealth, up from 33.7% in 2007. The bottom 90% now holds only 22.8% of the nation’s total wealth, down from 28.5% in 2007.

Some in retail automotive might perceive this widening gap as good news. More wealth can mean more auto sales, or at least more luxury vehicle sales. But, let’s add some perspective to those numbers.

According to FORBES, despite being the largest generation in the workforce today, Millennial salaries are 20 percent lower than Baby Boomers’ salaries when they were the same age. Their unemployment rate is twice the national average, and according to CNBC, their student loan monthly payment hovers just under $400.

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Categories
Recruiting

Is Generation Y Worth Hiring?

Contributing Author:
Amber Hash
Recruiting Manager
EFG Companies

Disloyal, arrogant, selfish, overindulgent, high-maintenance, frivolous, image-driven, impatient, over-confident and spoiled – Generation Y has heard it all.  And, now the generation that everyone thought would never grow up is starting to make up the bulk of the workforce. But, will they be successful in retail automotive? Are they worth hiring?

Honestly, retail automotive can’t afford NOT to hire this challenging generation. The consumer purchase model is rapidly changing – driven in large part by the digital proclivity of Generation Y. Who better to engage with these new customers than people who speak their language – online and via text?

Raised in the era of digital technology, members of Generation Y can quickly prove their worth in the retail automotive workplace.  But, some adjustments must be made to reach an equitable compromise with this generation. Here are some recommendations for dealerships seeking to successfully employ Generation Y.

They work to live

The members of Generation Y are committed to achieving work–life balance. While their career is highly important to them, they believe that working hard does not equate to working long hours. This can be a hard pill to swallow for automotive managers who live by the “sun-up to sun-down” model.

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Categories
Compliance

Say Goodbye to Disparate Impact Theory

Dave Gibbs Training Manager EFG Companies
Contributing Author:
Dave Gibbs
Training Manager
EFG Companies

On Monday, President Donald J. Trump signed into law the Congressional S.J. 57 resolution repealing the Consumer Financial Protection Bureau’s (CFPB) guidance on dealer markup. Originally issued in March, 2013, the auto lending guidance quickly received negative feedback. In fact, the ruling caused several finance sources to either switch to a flat-fee compensation model or enforce lower caps on dealer markups. The ruling also prompted the CFPB to impose consent orders with several institutions resulting in millions of dollars in fines.

The retail automotive industry is cheering this move, which began five months ago when the Government Accountability Office said Congress had the power under the Congressional Review Act (CRA) to overturn the CFPB guidance. But, before you start thinking the good old days are back, consider what started the industry on this path.

The CFPB’s original guidance was designed to inform lenders that it would begin enforcing the fair lending requirements of the Equal Credit Opportunity Act (ECOA) using a theory on disparate impact. This theory refers to practices that adversely affect protected classes of individuals, even though employer rules and practices are meant to be neutral. The CFPB used this theory to make the argument that dealer markup practices could result in unintentional discrimination during the credit process, and must therefore be reined in.

While the CFPB can no longer use disparate impact theory to force lenders to reduce dealer markup, the ECOA and its fair lending requirements remain in full effect. Other federal, state and local compliance regulations also remain, which prompts me to remind our clients that remaining in compliance is still in the dealership’s best interest. And, it’s highly unlikely that lenders who invested millions of dollars into comprehensive compliance platforms will suddenly reverse all those process changes.

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