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Public-Sector Squeeze

Monday, July 11, 2011
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Government work ain't what it used to be. Working in the public sector once offered a secure job with plush benefits. No longer.

These days, federal, state and municipal workers are seeing pay freezes, furloughs and layoffs. And on top of increased scrutiny over pay and benefits, more and more states are reconsidering collective-bargaining rights of state employees.

The cumulative effect may be tarnishing the prospect of government work for many would-be public-sector workers and curtailing the sector's ability to attract top talent.

"It is getting harder to get highly skilled individuals to join the public sector because of the uncertainty around wages and benefits going forward," says Ken Lewis, client relations director for Kenexa in Denver.

Lewis -- who recruits doctors and engineers for the Defense Department and has worked with the City of Los Angeles and other public-sector employers -- says potential recruits these days tend to have many more questions about health and retirement benefits offered by the government than they once did.

"It used to be that people felt comfortable going with the public sector because the raises and benefits were consistent; now, we're hearing rumblings from people who say they're not so sure about this anymore," he says.

"Even people we've managed to get into the pipeline are taking longer to actually sign on; they're concerned that they'll be forced to pay more for their benefits or even whether [benefits will] exist in the near future. This never used to happen, and it's increased the cycle time for recruiting folks to these positions."

Voter anger, and a growing awareness that, in many cases, rich retirement benefits promised to public-sector workers may not be sustainable, are prompting states and municipalities to re-examine these once-sacrosanct benefits.

A just-released study by the Pew Center on the States finds that state pension and retiree-healthcare funds were underfunded to the tune of $1.26 trillion at the end of fiscal year 2009. The shortfalls were driven by inadequate state contributions, an aging population and recession-related market losses.

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Those looking to leave for the private sector might face an unwelcome discovery, however.

Some public-sector employees have an inflated sense of private-sector pay, says Erin Peterson, who helps manage recruitment-process outsourcing at Chicago-based Aon Hewitt and works with a number of public-sector clients.

"I can tell you that many of the specialists and experts we recruit for our private-sector clients are paid considerably less than many teachers for work that is equally demanding and intellectually challenging," she says.

"It's a misperception that public-sector workers are paid less," she says.

"The appeal of public-sector jobs, particularly at the county and city level, is that you actually get to help make a difference in the community in which you live," Peterson says. "So ... I think it's important to get back to a values-based approach for attracting recruits -- emphasizing the fact that public service can be really satisfying."

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