Governments at all levels are hiring, boosting the job market

The U.S. has been adding jobs at a healthy clip for a couple of years now, and gains in the public sector have been an important factor in that growth.

Over 200,000 jobs were added in June alone, for instance, according to the Commerce Department, and 70,000 of them were in federal, state and local governments. 

Governments at all levels have been on a hiring spree because they’re still bouncing back from the labor market shocks caused by the pandemic. And while the public sector has made up a lot of lost ground, there are challenges ahead. 

When the pandemic hit in 2020, it took a while for employees to start leaving the state workforce in Vermont, state Commissioner of Human Resources Beth Fastiggi said. In the early months of lockdown, a lot of workers who could’ve left stayed on.

“Folks who likely delayed retirement, because we’re public service and really wanted to help, they stuck it out for quite a while,” she said.

But after a year or so of working through a state of emergency, those people’s attitudes started to change.

“People were just burnt out,” especially those in government roles that never went remote, Fastiggi said, like “highway transportation workers, the snowplow drivers, the corrections officers, the nurses.”

So, by 2022, the turnover rate among state government workers in Vermont had topped 15%, about 4 percentage points above normal, according to Fastiggi.

The same thing was happening to state and local governments all over the country. Some workers retired, while others opted for higher wages in the private sector.

“A lot of times they were losing corrections officers to the McDonald’s down the road,” said Leslie Scott Parker, head of the National Association of State Personnel Executives. 

While businesses quickly boosted salaries to try to combat labor shortages in 2021 and 2022, governments were slower to react.

“Government, you know, typically doesn’t work quite as quickly as the private sector,” Parker said.

Pay raises for state employees had to go through legislatures, which took time, said Liz Farmer, who focuses on state fiscal policy at the Pew Charitable Trusts.

“It’s like governments were kind of sitting on the sidelines waiting to get all their ducks in a row,” Farmer said. “And now it’s their turn.”

A majority of states approved across-the-board salary increases in 2023 and this year, she said. In Vermont, for example, many state employees just got a 4.5% pay boost. Those kinds of raises are making a difference.

“What we’ve seen the last year and a half or so is that kind of the explosion that we saw in the private sector in terms of jobs and wage growth, now it’s happening in the government sector,” Farmer said.

Government positions have made up over 17% of jobs added to the labor market this year, according to data from the federal Bureau of Labor Statistics. 

States and cities have offered more than just higher pay. Some governments have also given out hiring and referral bonuses, boosted benefits and offered remote or hybrid work.

But even with government hiring up, the process of filling those jobs hasn’t been easy.

“We’re seeing that people are looking at the jobs, but we’re not seeing that they’re necessarily applying for the jobs,” said Reid Walsh with Neogov, a company that provides software for public-sector HR departments. According to Neogov data, she said, government job postings are drawing fewer applicants than before the pandemic.

Part of the problem, Walsh said, is that government job listings can be filled with jargon.

“When we say things such as ‘Administrative Officer 1′ or ‘Procurement Specialist 2,’ those aren’t necessarily translatable to people’s everyday nomenclature,” Walsh said.

Walsh added that Neogov has worked with a few states to rewrite some job descriptions to make them look more like postings in the private sector.

“And we saw a lift. We saw about [an] 18% increase in those job applications when we did that,” Walsh said

But attracting applicants isn’t the only challenge. Governments are also facing an aging workforce. Gerald Young, a researcher with the MissionSquare Research Institute, which focuses on state and local governments, said HR managers who MissionSquare surveyed expect retirements to surge again soon.

“More than half are saying that they’re expecting the largest wave of retirees to happen in the next few years,” he said.

In its effort to fill those positions, the public sector could remain a big force in the labor market for years.