New York’s unions have put their full weight behind the “Fix Tier 6” campaign, which calls for reversing 2012 pension reforms that created a new pension tier for new hires with higher employee contributions, a later retirement age, and caps on how overtime factors into pension calculations.
Though this campaign is often framed as a teacher issue, it impacts almost all state and local employees in New York state, including those in New York City.
The campaign’s central claim is that shifting new hires into Tier 6 made working for either the state or the city unattractive, making recruiting and retaining public workers much harder. But employment data tells a different story. Turnover in New York has been stable and well below national averages.
Recruitment and retention hurdles have also been used to justify undoing pension reform in California, Oklahoma, and Alaska—and in those states, just as in New York, the data did not support the narrative.
Even where vacancies exist, New York policymakers should not assume that every empty position requires richer pension benefits to fill—especially in a state with a shrinking population and declining K-12 enrollment.
New York’s Tier 6 reform
By the time Albany felt compelled to create Tier 6 in 2012, pensions had already become one of the fastest-growing costs in state and local government. According to E.J. McMahon’s testimony from the time, “Over the past 10 years, annual taxpayer-funded employer contributions to public pension funds have risen by $12 billion.”
Former New York City Mayor Michael Bloomberg summed up:
“We are all facing a ticking time bomb. … Over the past decade pension costs have increased more than 600 percent in New York City. In Nassau County pensions have increased 865 percent. In Suffolk the growth has been 904 percent.”
Tier 6 was designed to slow the growth in pension costs by marginally altering benefits and increasing employee contribution rates. It did not cut the pensions already promised to existing workers, but rather changed the benefits promised to employees hired after April 1, 2012. The reform was expected to save New York City $30 billion and the state as a whole $83 billion dollars over 30 years.
Despite these reforms, pension contributions remain one of the largest items in the budgets of New York state and local governments. For example, in 2025, New York City spent $10 billion on public pensions and $4 billion on retiree health care benefits, which together accounted for roughly 12% of the city’s spending. New York state and local governments also carry more than $63 billion in unfunded pension liabilities and over $300 billion in unfunded other post-employment benefits (OPEBs)—primarily, health insurance promised to retired public employees and their dependents.
Public employee recruitment and retention
How has employee recruitment and retention changed since the reform took effect?
There is no consolidated report that tracks workforce trends among all state and local employees in New York. But the available data show that, however you cut it, turnover in New York is below national averages—and both New York state and New York city have more hires than separations.
The latest available turnover rate for public teachers in New York covers the 2020-21 to 2021-22 school years. During that period, the overall turnover rate for teachers was 14%. While the double-digit number may sound alarming, it is in line with national trends. Nationally, 16% of public school teachers either changed schools or left the profession in the 2020-21 school year, according to the National Center for Education Statistics.
In the most recent workforce report released by the New York State comptroller in 2024, the turnover rate among state agencies was 10.3%. In the same year, according to New York City’s Department of Citywide Administrative Services, the public employee turnover rate was reported at 10%. Both are well below the national turnover rate for state and local employees of 18%.
For every slice of New York’s public workforce for which data is available—state agency employees, city employees, and public school teachers—attrition is below the national average for state and local governments.
Turnover rates speak for retention, but how is recruitment? In 2024, both New York state and New York City’s hires outpaced separations, and hiring has rebounded sharply since the pandemic.
New York state agencies hired 18,600 new employees in 2024, against 15,100 departures—the widest hiring surplus in a decade.
In 2024, New York City’s hiring rate outpaced its separation rate, with hiring at 11% of the workforce and the separation rate remaining at 10%. The city’s vacancy rates have also been trending down since the end of the pandemic.
Pensions are inefficient at combating turnover
The fact that New York’s pension reform did not create a recruitment and retention crisis should come as no surprise. It is widely recognized in the academic literature that slight changes to pension benefits have little influence on recruitment and retention. This was the subject of a past Reason Foundation webinar, which is available for viewing here.
The main reason is that turnover is concentrated at the start of careers. It is the youngest and/or most recently hired employees who are at the greatest risk of quitting—and this demographic, being so far from retirement, consistently reports valuing job satisfaction, wages, and other factors much more highly than retirement benefits.
If finding and keeping talent is an issue, there are more prudent solutions. Catering to a myriad of employee preferences, such as remote work, flexible hours, or simply higher wages, is more effective—and avoids deferring cost to future taxpayers.
Another path is revisiting job requirements and training. Are there college degree requirements for positions that do not necessarily demand a college-educated person? Could you invest in upskilling current employees to perform more complex roles?
Even real vacancies would not justify undoing Tier 6
Even if employee recruitment and retention were a clear issue in New York, it should be seen not as a crisis, but as an opportunity.
New York has been losing people. The state’s population has shrunk since 2020. The Empire Center reported that eight in 10 New York cities have lost people since 2020. Even New York City’s population has shrunk, with around 200,000 fewer residents than in 2020.
New York’s K-12 school population is declining as well. According to an analysis by Reason Foundation, New York’s public school enrollment fell by 5.9% between 2020 and 2024 and is projected to keep declining. Yet the state increased, rather than decreased, public school staffing over that same period.
With this in mind, normal employee turnover in New York should be seen as an opportunity to “rightsize” their workforce. Instead of rushing to fill any and all empty positions, it would be prudent for New York governments to view vacancies as an opportunity to reduce their workforces to match the smaller populations they serve.
Recent technological developments have made significant strides toward eliminating repetitive tasks. Vacancies can be a natural inflection point to explore whether generative artificial intelligence (AI) or other technologies can enable the work to be completed with fewer employees.
Finally, employee vacancies and even genuine recruiting difficulties could be an opportunity to reconsider whether some municipal services could be better provided by external vendors. Trouble hiring administrative staff, park personnel, or sanitation workers may justify evaluating whether local for-profit or nonprofit providers could deliver those services more effectively. When structured well, outsourcing municipal service provision can harness competition, improve performance, and simplify public administration.
No justification to undo pension reform
Undoing the 2012 reform and awarding employees retroactive pension benefit increases would reverse tens of billions in projected savings and pile new costs onto New York’s state and local governments, which already carry $366 billion in unfunded employee retirement liabilities.
New York’s workforce numbers do not indicate a recruitment and retention crisis. State and city employees leave at rates below the national average, and hiring has not only caught up to but surpassed attrition.
Even where genuine vacancies exist, they do not automatically justify increases in pension benefits. New York is a state with a shrinking population and declining K-12 enrollment. Every vacancy should first be evaluated against actual service demands.
The academic literature is clear that pension generosity is not what keeps young workers—the demographic at most risk of quitting—in their jobs. If New York wants to invest in its workforce, there are far cheaper and more effective alternatives.