Picture this—classrooms full of children ready to learn but few educators there to teach. Patients in critical need of care but few nurses to tend to them, or a loved one in a dangerous situation, but emergency services are too inundated with other problems to respond.
Public sector employment levels are reaching a crisis point, but many leaders are actually making it worse instead of better. In recent years, we have also seen an uptick in anti-pension legislation and messaging—suggesting that moving away from defined benefit pensions is the best option for states and employees. We have also seen the pitfalls state and local governments face when making this ill-advised choice. Eliminating defined benefit pensions only exacerbates retention problems and sends quality public employees looking for other jobs with better benefits–leaving vital public services understaffed and key positions unfilled.
A National Crisis
The public sector has faced significant challenges in recent years. With COVID-19, followed by the Great Resignation, many public employees feel strained and burnt out due to staff shortages. Earlier this year, AFSCME President Lee Saunders stated that the public sector was short over 500,000 jobs, and fillings these jobs has been challenging. According to NEOGOV, there has been a 45% increase in public job openings but a 56% decrease in applicants per job. Meanwhile, in a time of inflationary pressures, private sector wage growth has far outpaced public sector pay increases. Seventy-nine percent of agencies cannot find qualified candidates to fill open positions, leading to staff burnout, increased overtime, cutbacks in services, and increased training of new employees.
State Case Study: Alaska
In 2005, after the state’s actuary made inaccurate projections about pension assets, Alaskan lawmakers closed the Public Employees Retirement System and the Teachers’ Retirement System pension plans to new employees–a decision they now realize was a mistake as they examine re-opening the plans this session. Since the closure, the state has had immense trouble recruiting and retaining public employees, costing upwards of $20 million annually. Newly hired public employees in Alaska are now only offered a 401(k)-style defined contribution retirement plan. Public employees in Alaska do not receive Social Security, making the defined-contribution plan the only source of predictable retirement income for new public employees.
As of January 2023, Alaska was reported to have 1,100 position openings for teachers, putting the state in the “worst place with this that Alaska has ever seen,” says Lisa Parady, executive director of the Alaska Council of School Administrators. Due to its shortage, states have had to consider options such as long-term teacher substitutes, international outsourcing, and “worst-case scenario,” distance delivery to keep classrooms operating.
Other states like Kansas and Missouri have taken additional measures to ensure classrooms continue to operate by implementing four-day school weeks and providing sign-on bonuses. Unfortunately, sign-on bonuses do not encourage retention. Meanwhile, Florida and Arizona have invited military veterans without teaching experience and college students to step in where needed.
Nationwide, there are at least 36,000 vacant teaching positions, along with 163,00 positions being held by underqualified teachers.
In a recent op-ed, 23-year police veteran Patrick Messmer details the effects his state’s decision to covert public employees to a defined-contribution plan, along with other longstanding issues, has had on his time in service. Messmer stated, “According to an FBI study in 2020, Alaska has the highest rate of assaults on police officers–more than five times the national average–due to an increasingly strained social fabric and the fact we are all short-staffed and often must send officers out to dangerous calls alone. I was part of that statistic—in 2020, I had a gun put to my head during an arrest because we didn’t have the proper staffing ratios to ensure backup.” According to a survey of public sector HR directors conducted by NEOGOV, 61% of HR directors reported having difficulties hiring for law enforcement.
Earlier this year, Juneau considered offering sign-on bonuses of up to $40,000 and enhancing retirement benefits to attract and retain more city workers after experiencing a severe shortage of bus drivers–forcing them to temporarily cancel some bus routes.
Here’s the Solution
The public sector has something to offer its employees that the private sector does not–it’s benefits! Retirement benefits, to be exact. According to NEOGOV, of the 609 survey participants who applied to public sector positions, 65% of applicants said benefits were the most appealing factor. In order to compete with the job market today and retain more qualified public employees, public sector organizations need to sell the advantages pensions have over traditional, no-good retirement benefit plans.
The Missouri city of Grandview is explicitly using its pension as a recruiting tool. The city bought billboards pushing the humorous message that your mom wants you to get a job with a pension. The billboards were also run in unison with paid digital ads specifically highlighting the retirement package offered to Grandview City workers. It’s an approach more public sector employers should emulate.
Denying future employees benefits such as defined benefit pension plans would only exacerbate the current recruitment and retention crisis. Pensions provide the utmost security in retirement and should be used as a proactive recruiting message.
Facing a major staffing shortage, government employers have a solution already in their benefits package that nearly all private sector employers lack: a secure and guaranteed retirement. There has never been a better time to highlight the unique benefit of defined-benefit pensions.