Since the Great Recession began and even afterward, state and municipal governments have been slashing their payrolls, implementing mandatory unpaid leave for employees and cutting back on once-generous health and retirement benefits. Now the after-effects of those cutbacks appear to be coming home to roost, a new survey finds.
Ninety percent of state and local government employees from all 50 states and the District of Columbia consider human capital issues to be a challenge for their organization, according to a nationwide survey from the Government Business Council and Route Fifty, a digital business-to-business publication from the publisher of Government Executive. Only 41 percent of the 928 individuals surveyed (more than half of whom hold executive-level roles) believe their organization is prepared for the looming baby boomer retirements. And just 40 percent indicate their organization is competitive with the private sector in its ability to recruit and hire talent.
That last item seems to weigh heavily on the minds of public-sector leaders these days, and for good reason. The generous pension benefits commonly associated with public-sector jobs do not appear to have the same lure for today’s younger candidates than in the past, according to the Pew Charitable Trust’s 2014 Recruiting and Retaining Public Sector Workers study, which is based on interviews with state HR officers.
As Sara Walker, director of the West Virginia Division of Personnel, explained:
“People who have been with the state are invested in being state employees and being able to retire from the system. They understand what’s waiting for them. But the generation that’s coming in—I don’t know that the pension plan would retain them because they’re mobile. They’re going to move. We’ll have to figure out how to have continuity of services with a generation that is a revolving door.”
Eugene Moser, former director of the New Mexico State Personnel Office, noted that younger workers tend to move much faster between jobs than the previous generation. For mobile workers like these, traditional pensions based on years of service obviously hold less appeal.
Lee-Ann Easton, administrator of the Nevada Division of Human Resource Management, said younger workers have different work-related priorities: “We are finding that the younger generation who grew up on technology wants more flexibility in their careers such as flexible hours and the option to telecommute. Pay is always a factor as well, but flexibility and telecommuting appear to be gaining in job satisfaction above retirement benefits.”
The study noted that several states, such as Vermont, are experimenting with offering new hires a choice between enrolling in a traditional defined-benefit plan or a new defined-contribution offering, including a hybrid option. And in the future, there may not be a choice: The huge unfunded pension liabilities facing many states is leading many traditional supporters of pensions — including Democrats — to support big changes that would end or significantly alter these benefits.Twitter It!