MissionSquare Research Institute Unveils Top Public Service Workforce Trends for 2024

January 9, 2024

As public service employers navigated another challenging year, MissionSquare Research Institute has identified five key workforce trends to watch in 2024. The trends focus on engaging younger workers, expanding and enhancing retirement plan features, promoting financial wellness, addressing student loan debt, and modernizing workforce systems.

The five trends are based on recent MissionSquare Research Institute research that highlights key strategies public employers can implement in 2024 to help solve a multitude of workforce challenges and become employers of choice.

Deanna J. Santana, Acting Chief Executive Officer and President of MissionSquare Retirement, said, "Last year was a challenging year for all employers, particularly in the public service sector. Chronic workforce shortages and increased demands for public services make attracting and retaining essential workers a formidable challenge. MissionSquare Retirement is proud to present innovative, solutions-oriented research from our Institute in 2023, offering strategies to overcome public service workforce challenges in 2024 and beyond.”

The five workforce trends to watch in 2024 are as follows:

1. Engage New Generations of Talent. In many ways, the shift to incorporating new generations to the workforce happens on autopilot, as more older workers retire. However, the challenge of attracting younger candidates to the public sector is a matter of familiarization, promotion, and engagement. Familiarization can start at an early age, particularly within K-12 education, visits to city hall, the state capitol, or other venues, and robust civic education. As students start to think about career choices, it is important for public employers to actively promote explorer programs, job shadowing, internships, or short-term service projects. These may be standalone opportunities or paired with training programs, such as in skilled trades or utilities. Schools of higher education can also play a role in enhancing the interest of those inclined to public service to select a career in state and local government.

The Institute’s recent survey of 1,000+ employees 35 and Under in the Public Sector revealed that 49% had some prior part-time or temporary experience with a public agency before taking a full-time job.  Given the importance of this pathway, bolstering such opportunities may be key to increasing future job applications.

Another aspect to consider with younger job seekers is their motivation, which often extends beyond salary. In both the 35 and Under study and a survey of government fellowship applicants, the factors most often motivating public sector employment were job security, meaningful work, an inclusive workplace culture, and personal satisfaction from being of service to their community. Actively engaging with applicants and new employees to promote these intangibles, listen to their interests, and collaborate on professional development can lead to long-term workforce stability among the next generation of public servants.

2. Expand Retirement Plan Auto-Features. In the public sector, defined benefit (DB) retirement plans remain the norm, with most employers also offering a supplemental Deferred Compensation plan or some Defined Benefit/Defined Contribution hybrid. Deferred compensation plans typically entail the individual participant deciding whether to enroll, in what amount, and how to invest their funds. Given the number of other benefits decisions facing new employees, and the tendency among many younger staff to consider retirement as a far-off event, deferred compensation plan participation remains low.^[i]

Auto-enrollment and auto-escalation provisions enroll all employees at some pre-set default level, while allowing them to opt-out or change the contribution amount if they desire. While such provisions are not new, the new SECURE 2.0 law will make them even more common within the private sector. Recent research provides a landscape overview of how auto-features are structured and case studies on their application in the public sector.

Public sector agencies that had not previously implemented auto features or similar agreements with employee bargaining groups may find that the result is both increased retirement savings and a more financially secure workforce.

3. Support Employees’ Financial Security. Employees face a myriad of concerns about their financial security. Two in three (68%) worry about personal financial issues while at work.^[ii] In addition, 64% are very or extremely worried about inflation, and 59% are considering leaving their jobs in the near future.^[iii]  Coupled with a lack of competitive salaries ranked as the top reason for leaving,^[iv] employers would do well to consider how to enhance the value of their salaries and benefits to employees as well as  the provision of financial literacy education to help employees optimize the use of their resources.

Retirement plans, health benefits, paid time off, and non-traditional or voluntary benefits all contribute to employees’ financial wellbeing, along with their understanding of key financial concepts. Among the resources to consider are the Institute’s survey of Public Sector Employee Financial Wellness Program Needs and Preferences and a research report, Examining the Financial Wellbeing of the U.S. Public Service Workforce.

4. Understand and Address Student Loan Debt. Discussion in Washington about federal policies regarding student debt continues. Regardless of whether or in what form those issues are resolved, state and local governments will play a critical role in understanding and responding to the debt carried by their current or prospective employees.

In the Institute’s survey on Morale, Public Service Motivation, Financial Concerns, and Retention, 80% of public employees indicated that their debt is a problem and 77% consider it an impediment to saving more for retirement.  Further, 26% of all employees indicated that they currently bear student loan debt for themselves, and 11% bear student loan debt for a spouse, child, or other family member. Among those 35 and under, 25% are very or extremely worried about paying back their student loans.^[v]

Those baseline statistics give a sense of how many people have debt, but how does that translate to those working in specific occupations? The Institute is finalizing a new study looking at the debt loads for specific degrees and how they impact the ability to hire for hard to fill positions in the public sector. Knowing, for example, the likely debt of a civil engineer, registered nurse, elementary school teacher, or police officer can help employers make more informed choices about debt assistance, tuition reimbursement, or other incentives like hiring or performance bonuses.

5. Modernize Workforce Systems and Classifications. The 2023 Workforce Survey results reflect both the application of technology and the limitations of that approach. Of the HR managers surveyed, the vast majority (93%) have needed to re-open recruitments at least occasionally because they received an insufficient number of qualified applicants. Meanwhile, only 9% of employers offer a mobile app for job candidates to track the status of their applications. It is no surprise, then, that time to hire is increasing. Given this, if a new mobile app is launched that shows the status of a recruitment, will it just appear as a never-refreshing hourglass icon on the applicant’s screen? And if so, is this simply going to discourage them from considering public employment? The solution may lie in some of the other common initiatives employers are implementing:

• Completing a compensation or classification study
• Reducing minimum education, skills, or licensing job requirements
• Dropping degree requirements for some positions
• Hiring below minimum qualifications for post-hiring upskilling

Any such changes are a balancing act – weighing the needs of each position, the evolving nature of the work, and the education or experience likely to correlate to professionalism, critical thinking, and specialized skills. But where historical standards for entry-level credentials may unnecessarily limit access to those otherwise qualified to perform the work, amending those standards may lead to a wider array of candidates, less need to re-open recruitments, and mobile apps that actually show progress in filling positions.

The demographics and size of the public workforce continues to evolve, particularly with generational change, increased diversity, the impacts of automation, and heightened competition for talent. Paying attention to the trends outlined here can help employers optimize recruitment and retention.

MissionSquare Research Institute promotes excellence in state and local government and other public service organizations to attract and retain talented employees. The organization identifies leading practices and conducts research on retirement plans, health and wellness benefits, workforce demographics and skill set needs, labor force development, and topics facing the not-for-profit industry and education sector. MissionSquare Research Institute brings together leaders and respected researchers. Visit the MissionSquare Research Institute for more information and access to research and publications.

MissionSquare Retirement is dedicated to guiding those who serve our communities toward a secure and confident financial future. Founded in 1972, MissionSquare Retirement is a financial services company with $71.6 billion assets under management and administration.* The company is focused on delivering retirement plans, investment options, and personalized guidance exclusively to the public service sector. For more information, visit www.missionsq.org or follow the company on Facebook, LinkedIn, and X.

*As of November 30, 2023. Includes 457, 401, 403(b), Retirement Health Savings (RHS) plans, Employer Investment Program (EIP) plans, affiliated IRAs, and investment-only assets.

[i] Even though 38% of state and local government employees have a DC plan available to them, only 18% participate; see Benefits of State and Local Government Employees, MissionSquare Research Institute, February 2022.

[ii] See Public Sector Employee Financial Wellness Program Needs and Preferences, MissionSquare Research Institute, May 2023.

[iii] See Morale, Public Service Motivation, Financial Concerns, and Retention, MissionSquare Research Institute, March 2023.

[iv] See State and Local Workforce: 2023 Survey Findings, MissionSquare Research Institute, June 2023.

[v] See 35 and Under in the Public Sector: Why Younger Workers Enter and Why They Stay (or Don’t), MissionSquare Research Institute, September 2023.