The Employee Exodus
Scores of government workers are nearing retirement age. Little is being done to plan for their replacement.
In the wake of the oil bust of the late 1980s, there was one thing Shreveport, Louisiana, didn't lack: applicants for city jobs. "It was an embarrassment of riches," says Joe Lunt, the city's long-time head of personnel. But in recent years, with the gambling industry fueling a surging local economy, the job market has tightened considerably. That set Lunt to thinking: How might it impact the city's ability to replace employees down the road? "We started looking at the age of our work force," he says, "and we discovered that, by and large, it was getting pretty long in the tooth."
Shreveport is hardly alone. Across the country, state and local governments are faced with an unprecedented wave of impending retirements, which promises to hit particularly hard at the senior executive level. According to a study done by Iowa's personnel department, for example, employees over the age of 45 holding top pay- grade positions make up one of the largest employee cohorts in state government. In San Diego County, California, personnel director Carlos G. Arauz says potential retirements among a significant number of top staff there have inspired the county to survey its "bench strength" to see who might be able to fill those positions.
In an era when the public sector has been adding employees and competition for workers is the tightest it's been in recent history, it all adds up to a looming manpower crisis in state and local government, argues Samuel M. Ehrenhalt, a senior fellow at the Rockefeller Institute of Government and author of a recent study on the aging state and local government work force.
According to Ehrenhalt's calculations, 42 percent of the 15.7 million people working for state and local government in 1999 were between 45 and 64 years old. In other words, says Ehrenhalt, two-fifths of state and local government employees will be eligible to retire in the next 15 years, raising the specter of the most significant talent and brain drain ever experienced by government. "This is a big locomotive traveling down the tracks and there's no stopping it," says Ehrenhalt.
But for the most part, states and municipalities are acting like they don't even see the train coming. "I've called several state governments to see how they're responding," says Ehrenhalt, "and the whole concept of manpower planning was notable for its absence." It's no better at the local level, contends Phil Rosenberg, personnel director for fast-growing Broward County, Florida, who also writes a regular column on local government human resources issues called the "Human Resources Doctor" for the National Association of Counties. "The bottom line is that this is perhaps the greatest problem that public sector administrators face today," says Rosenberg. "But it's tough to get people like county managers, who have an average tenure of 3.5 years, to focus on this kind of long-range planning."
Surveys conducted as part of Governing's Government Performance Project--which to date has covered all 50 states and the country's 35 highest-revenue cities--bear this out. Even in places where human resources officials have some sense of the situation--and despite the increasing sophistication of the technology to do customized demographic analyses--most admit that so far there's been no comprehensive or long-range plan put in place to address it.
Among the handful of jurisdictions that have begun to formulate at least a preliminary response is Kansas City, Missouri. "For the last couple of years, we've asked our retirement division to look at our work force and see who is eligible to retire in five, seven and nine years," says John Thigpen, personnel director for the city, which employs about 7,400 people. "Then, we've looked at where those jobs are and started to look at the type of recruiting we're going to have to do to fill them." But the most concerted efforts have been focused on assessing the impact of retirement among department directors and their top assistants, he adds.
San Diego County has taken a similar tack, says Carlos Arauz. "We began looking at succession planning a couple years ago, going through our executive ranks and seeing who was getting close to retirement and then looking at who might be available to fill those upper positions." The county has put together an executive talent bank of about 200 people, listing their current skills and areas of expertise, job preferences and possible new skills they might need in order to move up. Trying to do that for all 18,000 of the county's employees, on the other hand, "will be a major job," he says.
Nevertheless, many more positions are going to have to be filled besides just those being vacated by senior executives. Teachers, cops, civil engineers, accountants, mid-level managers, nurses and budget analysts are going to be retiring in droves, which is why experts such as Ehrenhalt argue that methodical, government-wide analyses are the only level of response adequate to the task.
The reasons for that have as much to do with the future job market as they do with the simple fact that governments will be losing people. It would be one thing if filling those jobs meant putting the government civil service machinery into a slightly higher gear to test candidates, put them on certified lists and let agencies hire away. But all those jobs will be opening up in a new demographic and economic era. As the population increases, the ensuing demands on state and local governments, especially in the areas of education, law enforcement, health care and technology, will fuel continued growth in the size of the government work force--particularly at the local level.
So not only will government have to replace retiring workers but it will have to do that at a time when the overall need for labor in the public sector will most likely be expanding. At the same time, the pool of potential job candidates is going to be shrinking. The number of workers 25 to 44 years old--prime recruitment fodder for governments--is expected to drop by 3 million between 1998 and 2008, while the number of workers 55 to 64 goes up by more than 7 million. That means the competition for younger workers is going to be fierce. As if all that didn't spell trouble enough, Shreveport's Joe Lunt says he has noticed another phenomenon: Upper-level career staff retiring early, even though they might not yet be eligible for their full pension, lured into the private sector by a white-hot job market offering higher salaries and more benefits. "A lot of guys can get out in their 50s with a decent annuity and find another job," he says.
That is why a very logical response on the part of government would be to figure out how to hang on to more older workers, says Ehrenhalt. Bonuses, part-time employment, job sharing and working from home are all ways that older employees might be tempted into staying on, he suggests. In many places, however, civil service, work and pension rules make it tough to do that. And while hanging on to older workers has its advantages, it is only forestalling the inevitable.
Just ask Iowa. The state Department of Transportation is staffed in large part by World War II veterans educated on the G.I. bill, who then got out of school and went into the state service. "These guys don't seem to want to leave until they're carried out," says Mollie Anderson, the state's head of personnel. Nevertheless, it's clear that in the not-too-distant future these old-timers will have to hang it up.
The WWII generation, along with the baby boomers, combine to make 60 percent of Iowa's state work force more than 40 years old. Which is why Anderson's department has just created a special office of strategic work force planning whose sole job it will be to analyze the state's work force and begin developing strategies for dealing with the coming crunch. Other departments in Iowa are taking the issue seriously enough that they are contributing money to staff the new office.
The experiences of other governments trying to get a leg up on this issue have made it clear that it is one thing to understand the problem but quite another to craft a response that will help alleviate it. The New York State personnel department has compiled very detailed statistics on the age of the state government work force, with employees' average age and time in state service broken down on an agency-by-agency basis. While the personnel department has, on its own, been aggressively trying to recruit in those areas where it knows it's experiencing brain drain, that's a shotgun approach to the problem that isn't helping some specific agencies.
Looking at the data on his agency's work force, for example, Brian Wing, commissioner of New York State's Office of Temporary and Disability Assistance, says, "we've got a work force most of whom were hired in the 1970s. For the last 10 years, we've been in a virtual hiring freeze, so there's very little new blood around here, and frankly, we don't have much of a bullpen." According to the personnel department's records, the average age of workers in Wing's shop is 48 and the average length of service is 17 years.
While Wing isn't panicking, he insists the time to act is now. One thing he wants is the ability to bring in new staffers in advance of retirements so that outgoing employees can help train incoming employees. "It's a double dilemma because you need experienced people to maintain continuity, and you need younger people with new skills and a fresh take on the world," says Wing. But to have both at once will require that the state ease its strict caps on full-time- equivalent positions. So Wing has approached the budget division and the personnel department about coming up with a more rational work force succession approach than waiting for employees to leave and then throwing green troops into the breach to replace them. "They're listening and they understand the problem," says Wing of his compatriots in the two control agencies. "But so far this hasn't become part of any fiscal planning."
Pennsylvania harbors one of the oldest state work forces in the country. Nearly 40,000 of the Keystone State's 78,000 employees are between the ages of 45 and 54, says Bernie Matscavage, a work force analyst with the state's personnel department. The largest single age group in state government--more than 3,500 employees--is 52.
The strategy there has been to methodically study age patterns among its employees to see what skills the state will be losing in the next five to 10 years, and then do targeted recruitment to begin backfilling those skills. To date, the state has gone on direct recruitment campaigns in accounting, budgeting, personnel administration and computer technology, fast-tracking college graduates into special state-run classes meant to quickly get the incoming group of employees up to speed. The full-court-press approach is helping, Matscavage says, but it isn't enough. In addition to such surgical strikes, the state this year is undertaking a broader analysis of all the occupation groups that will be most impacted by what he describes as "the crunch of baby boomers leaving the state service."
The human resources department in Minneapolis has undertaken one of the most ambitious work force planning and analysis efforts anywhere in the country. The city's top-to-bottom staffing review was inspired by some early, informal signs that significant numbers of city employees were getting ready to bolt. "We had a lot of people attending city seminars on retirement," says HR director Ann Eilbracht,, "and we were overhearing lots of water cooler conversations among employees about maximizing retirement benefits."
So the city decided to take a preliminary look at the overall age of its work force. It was a sobering snapshot. The 1998 analysis indicated that one-third of the city's employees would be eligible to retire within the next five years. That inspired the human resources department to launch an in-depth pilot project involving more detailed analyses of who might be leaving the city, specifically focused on the fire department and the assessor's office. "Those two projects resulted in startling findings about huge cohorts of people who could be leaving and the skills that would be going out the door with them," Eilbracht notes.
This year, rolling reviews of each of the remaining city departments have begun, and each will result in long-range work force succession plans. Such plans don't restrict themselves to a focus on replacing skills that might soon be lost, either. "We ask each department questions like: `Do you anticipate any mergers or acquisitions?'" says Eilbracht, to push departments to consider the broadest possible span of work force needs down the road.
Despite the dire predictions of an employee exodus, one reason for the tepid response in places other than Minneapolis and Pennsylvania may be that some officials aren't convinced that retirements would neccessarily result in a crisis for governments. While San Diego County's Carlos Arauz says he believes in comprehensive work force planning, and worries about where future leaders will come from, he also sees a world in which outsourcing will take some of the pressure off government staffing needs. San Diego County, in fact, just outsourced all of its information technology work.
In Shreveport, Louisiana, Joe Lunt says new ways of doing the public's business could, likewise, ease the crunch. "There will always be a compelling need for leadership in municipal government," Lunt says, but when it comes to the work that government does and how it does it, he thinks fewer employees will be the rule. Technology that allows work to be done in new ways, and technology that allows citizens direct access to information and services will eliminate the need for government employees as intermediaries. So when people start to leave government, says Lunt, "We can shift people around, and some people we're just not going to need anymore."
A lonely few aren't willing to bet on it. "In a way, this is like the Y2K computer problem," says New York's Brian Wing. "We have a chance to do something about it now. We're starting to feel the crunch, and I'm starting to have to scramble to fill positions because we've got nobody in place to move into those slots. And as that starts to happen more and more, it's going to drive the point home real quick. But we can't wait much longer."