Here’s one from the “Can that be right?” department: Salaries for loan officers are shrinking while teller pay is on the rise.
The nationwide median salary for loan officers was $44,306 in June, according to Glassdoor’s Local Pay Reports. Loan officers’ median base pay fell 5.3% from a year earlier, the steepest decline among the 84 job titles that Glassdoor tracks. The survey is based on 3-month moving averages using U.S. Census Bureau data.
During the same period, the median base pay for tellers rose 6.2% to $28,870. Only five jobs posted faster salary growth, including claims adjusters and baristas.
The trends seem surprising since: 1) loans are profit centers and for-profit banks frequently announce they have lured away lending teams from rivals, and 2) many bank and credit union branches are being closed or shrunk in the name of cost-cutting and the rise of mobile transactions.
But an improving economy, public pressure on highly paid bank CEOs to better reward their grunts and some technological advances have actually helped tellers more than loan officers.
Even taking into account tellers’ overall lower base pay, it’s striking how much tellers’ salaries are growing in comparison to loan officers, said Jeramy Kaiman, vice president at Adecco Group’s Accounting Principals, a recruiting firm.
“We’ve seen teller salaries going up, and it’s because of the sheer pressure on available talent at that entry level,” Kaiman said.
Due to the economic rebound, financial institutions are competing with companies outside the financial sector for the same group of workers to hire as tellers. The nation’s job growth has helped fuel this trend. Hiring accelerated in June, as the number of people who went back into the labor force from the ranks of the unemployed rose to 4.7 million, the highest since 1990, according to Bloomberg News.
“You think about the average teller, it’s a college student or a recent college graduate who has come from retail or customer service,” Kaiman said. “There are so many jobs available right now for those qualifications.”
The increase in teller pay, notably, follows efforts by big banks to boost hourly wages for their rank and file. JPMorgan Chase, Wells Fargo and Bank of America have all raised starting wages to more than $15 an hour, and a growing number of credit unions have also begun to increase wages to better reflect rising costs of living.
There is also a fundamental structural change in how retail floors at financial institutions are operated. As banks and credit unions adopt the so-called universal banker model, tellers are being asked to do more and are getting paid for the extra responsibility.
“The job of the teller is not just transactions anymore,” Kaiman said. “It’s also identifying residential loan leads and identifying clients that might make sense for wealth management.”
The universal banker model also works in the other direction when it comes to loan officer pay, as the lines between a teller and loan officer become blurred, Kaiman said.
Pay rates for veteran commercial lenders have continued to rise sharply over the past year, said Doug Rickart, a vice president of Robert Half Financial Services, which recruits talent for banks. A commercial lender who has at least five years of experience can expect a 4.1% salary increase this year, according to Robert Half’s yearly salary guide. That is one of the biggest increases in pay rates among all banking sector jobs.
“Banks are wanting to add capacity to expand their commercial loan portfolios,” Rickart said. “That requires more hands on deck, and you’re seeing salary growth especially for candidates moving from one bank to another.”
All that said, generalizations about consumer versus commercial lending are fraught given regional differences and the push and pull of so many systemic and structural forces.
For example, the residential-mortgage business has not become entirely automated, said Hunt Burke, chairman and CEO of the $3 billion-asset Burke & Herbert Bank & Trust in Alexandria, Va.
“Even if you go online and fill out the mortgage application, you still have to meet face-to-face with someone later on in the process,” Burke said. “The automation only gets the upfront word done.”
And nonbank mortgage companies have been in hiring mode even amid fluctuating volume, with new employees rising nearly 1% in May.
Perhaps the best news for the banking sector from the latest labor data is that its appeal appears to have grown in the eyes of newly minted college graduates.
For about five years around the time of the financial crisis, “there was a really negative stigma about banks,” Kaiman said. “We’ve gotten enough past that now that people are reattracted to the industry. The group of folks who have been in college over the past four years don’t remember any of that because they were in high school when it happened.”
And FIs’ modernization efforts — such as the embrace of fintech and attempts to create friendlier workplaces — may be taking root.
“Banks are thought of now as a sexy industry,” Kaiman said. “If you are someone who wants to have a lot of growth and be intellectually stretched, a lot of candidates are really attracted to this industry.”