State and local government workforce facing worst challenges in 50 years

Bonds

State and local governments are experiencing recruitment and retention challenges not seen on this scale in fifty years.

That’s according to panelists at the Government Finance Officers Association’s annual conference on Sunday, where panelists discussed the widespread challenges the public sector is facing with respect to recruitment and retention experienced since the onslaught of COVID-19 beginning in February 2020.

“Simply put, what we’re seeing right now is one of the most challenging single workforce situations in the past 50 years,” said Joshua Franzel, managing director, research and thought leadership, MissionSquare Retirement.

Outgoing GFOA President Michael Bryant recently said that GFOA is hyper focused on addressing the challenges associated with the great resignation, and incoming GFOA President Terri Velasquez highlighted talent recruitment as one of GFOA’s highest priorities in the coming year.

Michael Bryant, outgoing president of GFOA said the climate for hiring and retaining employees has only become worse during his tenure as president.

“These people have walked away from the workforce and they’re not returning,” Bryant said.

Franzel described the complicated environment as a result of the supply of labor, fiscal uncertainties, rigid compensation structures and other demographic issues that add to the overall dismal environment managers are facing in hiring and retaining public sector employees.

Since February 2020, state government employment has been reduced by 103,000 positions or 1.9%, according to MissionSquare research. But local governments saw an even larger reduction in workforce, shedding 596,000 positions, just over 4%.

The transportation sector represents the largest single sector decline in workforce, losing 21,700 workers, or 7.4%.

From December 2021 to February 2022, job openings at state and local governments were the highest they’d been in 20 years. Hiring reached a 20 year high in February 2022 and those quitting has remained the highest in over 20 years since October 2021.

But it is not just a lack of good candidates or good candidates seeking better positions. In 2022, 53% of state and local government HR directors reported that retirement-eligible employees are accelerating their retirements, a large jump from the 12% in 2009 in the wake of the global financial crisis.

When polled in November and December of 2021, 43% of retiring public sector employees signaled they were burned out due to the stress of the job during the pandemic.

February 2020 marked an all time high in the number of public sector workers, surpassing 5,300,000. But that doesn’t mean public finance officials didn’t have staffing issues before the pandemic.

Some actions by state and local governments have been taken in recent years to quell the lack of worker participation but it’s hardly enough to combat the historic forces at work in this current moment.

Boulder County, Colorado removed college degree requirements for 84 of its 375 public sector jobs in 2019 and has since increased that number to 99.

According to Ramona Farineau, chief financial officer for Boulder County, the initiative began as an attempt to increase applicant pools , increase advancement opportunities for its current staff and to increase the diversity of county workforce.

Beginning the initiative in 2014 but not rolling it out until five years later, Boulder County created a commission, researched the Fair Labor Standards Act and found that “degree requirements were found to be unnecessary for essential job performance,” Farineau said. 

Throughout the presentation Farineau continually touted the famous Apple Chief Executive Tim Cook saying that there’s a mismatch between the skills learned in college and the skills that businesses need.

While they knew this would be uncomfortable for hiring managers so used to assessing candidates with degrees, they sought to “assure managers that the goal is not to lower hiring standards, it is to focus on the methods of assessment that directly relate to job performance,” Farineau said.

The program hardly had any time to bear any fruit as less than a year after it kicked off in earnest, the pandemic presented brand new challenges. 

Boulder County is now back in the same position it was before. “Our 2019 implementation was followed by the 2020 pandemic and now, our post pandemic labor shortage,” Farineau said. “I can’t say our applicant pools are doing very well at all.”

Durham County, North Carolina, like many others since the pandemic, has increased its many employee incentives to help recruit and retain. They offer a 3% cost of living adjustment for all employees, a one-time longevity bonus based on years of service in 5 year increments, vacation buyback program where employees can sell up to 40 hours of their vacation time, as well as a $6,000 sign on bonus for critical positions, among others.

But they’re still experiencing a high turnover rate, as Durham County posits a 19.09% turnover rate for fiscal year 2021-2022, a 3% increase over from 2020.

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