Public Sector Employers Need to Compete for Talent
News reports make it clear – government agencies continue to have serious staffing problems. The words ‘crisis’ and ‘challenging’ have appeared in the headlines. The answer by both public and private employers is dropping degree requirements and shifting to skills-based hiring. That is expected to increase the number of applicants — but it’s not going to solve government’s diverse staffing problems.
Recent national employment data show labor markets have softened. Fewer companies are hiring and there have been layoffs. But labor markets are not national, they are local or regional. In the current climate, job seekers are reluctant to relocate. An agency’s workforce, local talent availability, and mix of competing employers make each market different.
Government staffing problems are complicated by the long list of diverse agencies and the hundreds of job families. Recruiting prison guards, for example, is a very different problem than hiring teachers or EMTs. The jobs important in Alaska are unknown in Manhattan. In this new, still changing work environment, static civil service systems make it difficult to respond to rapidly changing competitive practices.
Government Has Multiple Staffing Problems
Recent columns suggest private employers are about to be hit by “Great Resignation 2.0”, based on surveys showing a high percentage of employees are considering resigning. Public employers have had similar resignation problems, especially among young workers, as reported by Mission Square Research Institute. Noncompetitive, low wages were cited in exit interviews as the most common reason for leaving.
The resignations confirm a problem that has rarely been discussed in public HR journals. The generous employee benefits are no longer enough to attract or retain young workers.
Moreover, the report makes it clear public agencies are competing with private employers for common jobs where degrees do not provide occupation-specific skills. Those are the jobs affected by eliminating degree requirements. Private employers of course have more flexibility to offer higher salaries, hiring bonuses, and newer benefits focused on mental health and schedule flexibility.
Serious vacancy problems also affect jobs that do not require degrees. Police, fire, corrections, transit, paramedics/EMTs lead the list. Additionally, there are shortages in skilled trade jobs essential to construction, equipment repairs, and building and road maintenance. These jobs have “gotten a bad rap” and attract few young applicants. Noncompetitive salaries are a common problem.
In addition, there are core jobs, the foundation of several government functions, where degrees remain a standard requirement – education, libraries, public health, and social service. Those departments experienced heavy losses in the COVID crisis. To illustrate the magnitude of the shortages, a new Penn State study shows Pennsylvania now needs an additional 15,000 teachers. Similar reports confirm the severity of the shortages in other public service fields. The needed changes go beyond pay increases.
The staffing problems are found at all levels of government. Simply stated, there are too few job seekers to fill mounting vacancies. To quote from a NCSL statement, “The bad news for government hiring is that the public sector has lagged far behind private employers . . . The competitive market we’re in has made it increasingly difficult for state and local government to attract and retain workers.”
Something needs to change. Going forward, heavy retirements will continue, making the problem worse.
The Problem is Long Term
COVID-19 exacerbated workforce problems that had been simmering for years. Teacher shortages, for example, go back at least to 2000. According to the US Chamber of Commerce, the worker shortage currently affecting employers “of every size and industry”, was predicted a decade ago.
The problem is tied to long-term trends. Its demographics, culture shifts de-emphasizing certain occupations, and the costs of education. This is no longer COVID related.
The demographic trends are the “silver tsunami,” with Boomers heading into retirement, combined with couples having fewer children. Forbes reported, “Millennials Are Not Having Babies.” Simply stated, there are not enough young workers starting careers to replace retiring older workers. Population data shows each younger cohort is smaller. That pattern will impact staffing going forward.
A related but often ignored statistic is the participation rate – that is the total employed and unemployed workers as a percentage of the civilian population. It declined from 64.7 percent in 2010 to 62.7 percent today and is projected to fall further to 60.4 percent in 2030. That may not appear to be significant, but each percentage point drop is a loss of almost 2 million workers. The dropouts have been mostly men.
An added problem is the drop in college graduates. The pandemic makes it difficult to understand but it’s a product of the declining numbers of young people and a drop in the percentage pursuing degrees. The “skyrocket” in college costs is also a factor. That’s a serious concern in fields, particularly education, where degrees are essential.
The trends are long term. The economy has ups and downs but the population and the country’s workforce is steadily aging. In the first half of 2024, Fortune magazine referred to worker shortages as, “The biggest problem facing large companies right now is finding great talent . . .” The large numbers approaching retirement add to the problems. The election could change the employment picture significantly.
The Problem for Public Employers is Complex
Public employers have far more complex staffing problems than private employers. It’s the long list of diverse agencies and the hundreds of job families. It’s also deeply entrenched practice of applying the same policies and decisions to mixed occupations and across the differences in local labor markets. Civil service systems have been referred to as “frozen in time.”
With few exceptions, public employers are forced by laws, union contracts, politics, and cultural resistance to operate with often dated practices. Few civil service systems have been modified to reflect the latest employment practices. The multiplicity of agencies and interest groups makes it difficult to build consensus on needed changes.
Employees in business also resist change, but a driving force in the culture is performing at the level needed for financial success – and with success many will benefit financially. There is a shared commitment to realizing success. In business responding to market developments is an ongoing process.
An often-overlooked issue is the backgrounds of the individuals who run for election as government leaders. They rarely have significant experience as executives or managers of large work groups. Their focus is on public policy issues, not employee problems. Few have experience leading change initiatives.
An exception is the state of Tennessee. The Governor from 2011 to 2019, Bill Haslam, had a solid corporate background and was previously the Mayor of Knoxville. He succeeded in leading civil service reform. In 2019 the state was ranked as one of the ten best employers in the state.
Leaders at all levels need to make it clear they are committed to maintaining a good place to work, and make that point frequently. The “great places to work” build what is referred to as “psychological capital” that enhances well-being and performance. That’s true as well for the better managed hospitals and colleges. Tennessee proved how important that is. It should be a goal of every employer.
The staffing problems are found at all levels of government. Simply stated, there are too few job seekers to fill mounting vacancies.
Vacancies Are Costly
Government critics sometimes argue vacancies save money by reducing payroll but that’s shortsighted. The cost is the time of everyone, based on their salaries, involved in recruiting, assessing applicants, onboarding new hires, along with the training time and resources to make the new hire productive. Reports suggest it takes 75 to 125 days to fill a government job. In the private sector it takes 25 to 45 days. Top candidates often get offers the day they are interviewed.
Added to that is the lost productivity when a job goes unfilled plus any direct costs associated with burnout problems of co-workers expected to perform added duties. The total of all “costs” can easily exceed 100 percent of a job’s starting pay.
Possibly more important, when agency performance is impacted by vacancies, and continues for an extended period, it adversely impacts public support. Pew research data shows public trust of government has declined significantly since 2000. Pew reports “only 29% of Democrats and just 9% of Republicans say they trust the government just about always or most of the time.”
Skill Based Hiring Is Only the Start
Dropping degree requirements should increase the numbers but job seekers with the best capabilities will continue to command the best offers. The list of private employers that have made the change includes prominent companies like Bank of America, Accenture, IBM, and Google. A survey in late 2023 found close to half the companies were planning to eliminate degree requirements for select positions.
States and cities have also gotten on this bandwagon. More than 20 states, starting with Maryland in 2022, have announced the change. Philadelphia is possibly the first major city, announcing the change in early 2024 as one of the first acts of a new Mayor.
Requiring a diploma was a simplistic, discriminatory practice. The focus on skills is not new; it emerged almost three decades ago but is still in development. Today it’s common to find long lists of generic job skills (or competencies) for a job series. Lists have been developed for hundreds of occupations.
It’s not limited to hiring. Skills or competencies – there are subtle differences – are a focus in promotions, workforce and career planning, developing training sessions, and performance management.
Looking at the lists as someone with experience in skill-based management, the emerging practice ignores a key point – the skills must be accepted by the managers and supervisors making hiring decisions. They need to see skills as a “tool that helps with their staffing decisions.” They along with employees whose careers are impacted need to see it as practical and fair. They understand better than anyone the skills that are keys to job success. Typically, a few key skills are essential to good performance. Higher level skills are needed at each stage in career ladders.
A suggested strategy is highlighting employers that have transitioned to skills for one or more job families and have evidence the change is successful. Success stories confirm better practices are possible.
An Answer for Severely Affected Occupations
Reports show clearly staffing problems are more severe for certain job series. Further, the “cost” to the public is higher in certain agencies (e.g., public health). The severity of the problems varies across the country, depending on the ages of incumbents, regional access to training, and the local availability of specialists. Every agency has somewhat different problems.
The answer – and often the only answer – is adopting modified employment practices to attract and retain needed staff. Pay increases are widely seen as necessary to attract more applicants but the hurdle will be reaching agreement on larger increases for select occupations or work sites where shortages are critical. A few states have authorized pay increases for select job series, but the reports do not suggest the goal is to maintain competitive pay levels.
In 1990 the federal government introduced locality pay, recognizing that market pay levels are higher in urban areas. The goal was clear – to make government more competitive in major cities. States could simply shift to higher salaries in the same cities. Years earlier Congress created the Federal Wage System based on local pay surveys for ‘blue collar’ jobs. A policy similar to the FWS would help state agencies staff county offices.
Another option is to authorize certain agencies to develop independent pay systems. The federal government took that step with several agencies – SEC, FDIC, GAO, IRS, FAA, DOD research labs and others. It’s still true of course that Congress controls the increases, but the agencies annually start their planning with analyses of market pay levels. The shortages in public health agencies fully justify creating separate, market aligned pay systems. State prison agencies would also benefit from a separate system.
Planning for the Post-Election Years
History shows policy changes are more likely to succeed when they are advocated by newly elected leaders. The election makes the next four months the best time to address workforce problems.
The first step is to develop a convincing argument that change is needed. That should be based on data confirming agency performance problems. A four-year workforce analysis showing anticipated turnover and retirements would be useful. Where new technology is emerging, the impact on staffing could also be evaluated. Leaders need to see how vacancy problems are projected to impact agency performance.
A market pay analysis would highlight jobs where noncompetitive pay might contribute to vacancies and impede hiring. It’s not common but agencies could participate in local wage and salary surveys so they have access to competitive practices. Pay data are readily available to employees on several websites (e.g., Glassdoor/Are you paid fairly?) so it’s important to develop defensible information.
A step that every organization should consider is relying on Employee Resource Groups to identify changes that would make the organization a more attractive place to work. ERGs can be assembled in many ways – occupation, work location, job level, age, etc. They know what’s problematic, how the organization is viewed in the community, and very likely the practices in other local employers.
The staffing problems suggests ERGs should assess the recruiting process. That starts with an agency’s “brand” or “employee value proposition” – the reasons a job seeker would want to be hired. It’s likely the pros and cons will vary with the occupation. Any new benefits related to wellness and career development should be featured. Changes to shorten the time to hire would help.
The shortages are not a new problem. In several government fields the recruiting problems go back a decade or more. There have been reports that GenZers are not interested in public sector careers. Demographic data show the number of young workers starting careers will continue to decline. With continuing heavy retirements, vacancy problems will get worse if public employers fail to update their employment practices.
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