Report: Local and state governments are facing a retention crisis; the worst could be yet to come

When the pandemic struck in 2020, public retention was hit hard: jobs in local government plummeted by 8.5 percent; state employment dropped by 4.4 percent. Two years later, local and state government jobs have rebounded by about half—to 4.1 and 1.9 percent below pre-pandemic levels respectively, according to a new report from Mission Square Research Group.

To meet post-pandemic needs, as communities re-emerge into a new normal, “81 percent of state and local governments are hiring new employees but face workforce challenges that are impacting total employment,” notes a statement on the report, “State and Local Workforce 2022,” which was conducted in collaboration with the International Public Management Association for Human Resources and the National Association of State Personnel Executives. The research institute will hold a webinar Monday at 2 p.m. to discuss the findings of the survey, which was conducted this year between March 3 to April 24, and has been published annually since 2009.

While the public sector in general is facing a retention crisis, specific positions are harder to fill than others.

Nursing positions were ranked as the most difficult to fill, for example, with 83 percent of respondents reporting difficulties and 94 percent reporting not enough qualified applicants for the number of open positions. In healthcare, more generally, 60 to 75 percent of respondents reported facing hiring challenges, followed by corrections and policing at 64 percent, skilled trades at 57 percent and engineering at 52 percent.

Extrapolating from these findings, it’s clear that events over the last two years—including the pandemic, an economic downturn and a shift in what the public expects from public safety—have exponentially impacted government workforce norms, creating shortages in positions that were previously easier to fill.

“Seven of the ten positions most identified as hard to fill had fewer than 10 percent of respondents reporting that in 2015,” the report says, “with engineering, policing and information technology in the range of 12-16 percent. While the Great Resignation had an impact on these positions, the share considering each of those ten hard to fill had at least doubled by 2019.”

And while hiring numbers are ticking upward, they aren’t enough to make up for those exiting public service. While 55 percent of administrators say they hired more people last year than in 2020, “69 percent of state and local government human resource professionals said more employees were quitting and 60 percent said more were retiring,” the statement continues.

The worst of it could be yet to come: 53 percent of respondents reported employees are accelerating their retirement plans, with about half the share of baby boomers working in the public sector having retired already. Reflecting this concerning trend, 41 percent of respondents say they’re still bracing for the biggest impact, while 22 percent said it’s happening now—up from 17 percent who responded to the same question in 2021.

To meet this retention and hiring crisis, managers and administrators are modifying workplace norms and changing their practices. While full-time telework positions are down as people return to offices after two years of working from home, hybrid options are up: 54 percent of respondents said flexible work models have become common practice.

This could look like “four 10-hour days—an arrangement that offers employees time to take care of personal priorities on a day that they would otherwise be at work. This is typically promoted to the public as a win-win, in that it extends office hours on the remaining days of the week to enable government business to be conducted earlier in the morning or later in the evening,” the report says.

Flexibility in work is perhaps the most profound way government admins can entice talent into their organization, as private sector wages continue to outpace what can be offered by public organizations (given the fiscal restrictions of local and state governments due to constrained revenue streams). Employee assistance programs and mental health support remained the top retention strategies used by respondents, with 93 percent indicating their organizations offer such services.

As retention departments continue to evolve to meet the unprecedented challenges thrust on organizations because of the pandemic, their future priorities are clear.

“Looking ahead, governments ranked the offering of a competitive compensation package as their highest priority (86 percent rank it as important), with an additional 41 percent indicating an intent to perform a job classification study,” the report says. “The most significant change from last year is in dealing with the challenge of turnover, which has risen from 44 percent identifying it as an important priority in 2021 to 67 percent in 2022.”