Report: Labor shortage, hiring challenges persist for state and local government hiring managers

It’s already midway through 2023, and local governments are still grappling with a severe labor shortage that began during the pandemic and hasn’t let up. According to new research from the MissionSquare Research Institute, the National Association of State Personnel Executives (NASPE) and the Public Sector HR Association (PSHRA), public sector organizations are still facing hiring challenges, as a higher-than-average percentage of employees either quit or retire.

“State and local governments continue to face severe labor shortages and are deploying new strategies to attract and retain public service workers,” reads a brief outlining the findings of a new report, “State and Local Workforce: 2023 Survey Findings.” “State and local governments hired more full-time or part-time staff in 2022 than in 2021, but it was more common for agencies to report that quits and retirements increased rather than decreased.”

In a survey conducted from March 10 to April 25 of nearly 250 state and local government human resource managers, 53% said their full-time workforce has increased over the last year, 27% said it stayed the same, and 17% said it decreased. Additionally, 13% reported that employees are accelerating their retirement plans, while only 30% said current staff members are prepared for retirement. It was more common for organizations to report an increase in people leaving than a decrease.

When it comes to recruitment, 55% said their compensation is competitive, and 62% reported pay increases to stay compentitive. Unsurprisingly, as public organizations have traditionally relied on robust benefit packages to entice new employees, 89% said their benefits are competitive.

Given their administrative needs, organizations are developing and deploying new recruitment strategies—such as dropping degree requirements—to widen their pool of potential candidates.

“It’s troubling to witness the continued challenges hiring and keeping employees to deliver the essential public services our nation’s communities rely upon. But I’m encouraged that public officials are taking aggressive action to combat the challenges—from offering hiring bonuses to changing job requirements,” said Deanna Santana, acting chief executive officer and preisdent at MissionSquare Retirement in a statement. “It’s reassuring that policymakers are sustaining retirement and other benefits, which are widely considered to be competitive and a magnet for public employees.”

Specificallly, 29% over organizations have dropped degree requirements for some positions, 9% have started offering on-the-spot conditional job offers, and 44% have offered some sort of bonus incentive—29% reported targeted bonuses, 22% said they paid bonuses to existing employees for referrals, 17% gave out retention bonuses, and 5% gave out general hiring bonuses for all new employees.

The report “provides actionable insights for leaders,” said NASPE Executive Director Leslie Scott Parker in the statement. “For example, it’s clear that re-thinking job descriptions and dropping degree requirements is an emerging strategy for many jurisdictions that could help fill positions. It’s also clear that public sector salaries across the board finally are increasing and that workforce challenges likely will be long-term given the wave of retirements.”

The most popular recruiting tools cited by respondents include advertising via government websites (60%), social media (59%), employee referrals (55%), profession-specific media (48%), commercial websites (42%), college outreach (37%), and job fairs (30%).

“The survey data collected on the public sector workforce is so important for developing new strategies to solve the unprecedented workforce challenges facing public sector employers,” said Cara Woodson Welch, CEO of the Public Sector HR Association (PSHRA). “PSHRA and its members will leverage this new information to continue driving the conversation on pragmatic solutions to attract and retain public service employees.”