The Great Resignation, the noticeable shift in employees leaving their jobs at faster rates during and after the COVID-19 pandemic, has had a significant impact on the public sector workforce.
In March 2022, over a third of the state and local government workers said they were considering quitting, according to a survey by MissionSquare Research Institute and Greenwald Research. This suggests that the worrisome trend of record resignations in the public sector could continue. In response to growing challenges in attracting and keeping valuable workers, lawmakers and government employers are eager to find solutions. Many policymakers are considering whether retirement benefits can be used to improve recruiting and retention.
But addressing issues with retirement benefit design can be complicated because it is unclear how much value employees attribute to each benefit when they decide on accepting a job offer. Although government employers may assume that retirement benefits can help them attract a quality labor force, research is inconclusive. This topic deserves more attention in the face of ongoing recruitment challenges. One way to investigate further is to ask labor force entrants about their preferences directly. At least one survey suggests that younger public workers might not perceive retirement benefits as a highly motivating factor, contradicting conventional wisdom.
Because retirement benefits make up a large share of the compensation package, a change in the value of retirement benefits can influence employment decisions. The traditional belief is that—other factors being equal—a change in retirement benefits may lead to a change in employment attractiveness and, over time, changes in retention. When researchers study retirement benefits empirically, using data from pension plans, we assume workers’ actions change based on the shift in incentive (retirement benefit). But deriving such a conclusion requires an assumption that employees value retirement as much as other parts of their compensation package, including salary, health insurance, stability, etc. Is that assumption true?
One way to get a better understanding is to implement a qualitative study tool that would reveal how employees value retirement benefits when compared to other deciding factors. Specifically: Ask prospective employees whether they find specific benefits meaningful enough to motivate their employment decisions.
An April-May 2022 survey by MissionSquare Research Institute did that by asking 102 fellowship candidates from the national service program Lead For America to gauge their motivation toward public service, impressions of the application process, and other career aspirations. (Figure 1)
Figure 1. Ranking of workplace considerations
Given a list of eight benefits to public sector employment, personal satisfaction from the job and salary were ranked highest, and life insurance and retirement benefits ranked lowest. According to the respondents, health insurance benefits are still very important for young workers, ranking third in the survey’s list of priorities. Moreover, even nontraditional benefits such as tuition assistance, student loan repayment, employee assistance programs, and childcare assistance ranked higher than retirement benefits in the survey.
This finding reveals important insight into how these Gen Z employees think about retirement benefits. If retirement benefits are not valued as much as other benefits, perhaps public sector employers are overinvesting in pensions at the expense of other components, like professional development programs and childcare.
Public sector employers should prioritize understanding the work components that matter to their employees. MissionSquare’s small survey of young workers reveals that retirement benefits might not be a high priority for the incoming labor force. So perhaps that is not the right way to attract and retain valued workers. Judging by the responses of this young group of public workers, policymakers should further survey a broader sample of government workers because they may find similar results suggesting they should prioritize recruitment and retainment policies that improve personal satisfaction and general compensation.
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