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Are We Preparing Public Employees for Retirement?

October 31, 2021

Twenty million state and local government workers provide essential services across the United States and, like many Americans, they continue to feel the pandemic’s impact. They’ve taken a hit on personal finances and overall employment outlooks, both for the short and longer terms. For some in public service, this impact has been acute. Many positions have a high degree of public contact. Others have faced workplace fluctuations since March 2020 — facilities opening and closing, interruptions in programs, etc. Some may continue to fear for their jobs, given the uncertainty that existed in early 2020 around government revenues, increased expenditures, and related staffing levels.

Tracking the Pandemic’s Impact

The MissionSquare Research Institute has been tracking the effects of the pandemic on public servants through national surveys while also researching management strategies that effectively support government employees in these challenging times.

These statistics reflect responses from state and local workers, as of May 2021:

  • 42% reported being negatively impacted financially by the pandemic – down from 56% one year earlier.
  • 31% took on more debt throughout the course of the pandemic. Less than a third (30%) had a fully funded emergency fund, while 41% had one that was partially funded, and 37% had to tap into these funds to make ends meet.
  • More employees reduced savings for retirement (relative to those increasing). More were saving less generally (relative to those saving more).
  • 41% were spending less, while 25% were spending more than they were pre-pandemic.

Given these financial challenges and continued difficulties in recruiting and retaining talented staff, many governments are placing more emphasis on training and development to support their employees. As is evident in the responses above, financial wellness education is critical.

Financial Wellness Programs are Lagging

Pre-pandemic Institute research showed that only 29% of state and local employees reported being offered a financial wellness program by their employers. At the same time, 68% noted they would participate in one if offered. We see a clear gap between access and availability. Closing this gap would go a long way in helping employees emerge from the pandemic on more solid personal financial footing. It would also help public employers maintain a workforce with reduced levels of stress and distractions that come from financial hardship, while underpinning state and local governments’ roles as employers of choice.

As governments of all sizes begin to plan for what their future workforces and workplaces will look like post-pandemic, now is a perfect time to establish or enhance financial wellness programs. A variety of roles support these efforts, including administrators, elected officials, human resource directors, finance officers, department heads, and other key government leaders. There is no one best way to do this, but reflecting on surveys and interviews of governments that have gone down this path, certain considerations emerge. Public employers can start by:

  • Assessing the employee needs and preferences on what topics should be included in these programs. These could include retirement planning, budgeting, emergency funds, debt management, mortgages, and saving for college, among other areas. Consider how this information could be offered (e.g., in-person vs online workshops, email and mobile communications, and on-demand modules).
  • Communicating the need for these programs to other decision makers throughout the government department or enterprise overall. Make the case: outline the potential positive impacts on organizational efficiency, employee morale, and benefit cost reductions due to reduced health care needs and sick leave.
  • Tailoring financial wellness programs to account for different levels of financial understanding, life stages, and workplace environments. State and local workforces range from administrative offices to transportation systems to community frontline services. Also, take into account the appropriateness of broadening program access to other household members.

Moving Beyond the Covid-19 Pandemic

These are unprecedented times. State and local governments nationwide face an array of challenges. Labor markets are tight, and public employers need to support and retain their valuable current employees while recruiting others with essential skill sets. Leaders should consider a range of innovative workforce policies and initiatives, such as financial wellness programs. Efforts like these will help best position those that have served the public so well over the years and will continue to do so well beyond the pandemic.

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