Future Compensation of the State and Local Workforce: Are Compensation and Benefit Packages Ready to Address the Occupational Needs of the Next Decade?

By Franzel, Joshua M. | The Public Manager, Summer 2009 | Go to article overview

Future Compensation of the State and Local Workforce: Are Compensation and Benefit Packages Ready to Address the Occupational Needs of the Next Decade?


Franzel, Joshua M., The Public Manager


The U.S. Bureau of Labor Statistics (BLS) projects that by 2016, 124 million people will be employed by the U.S. private sector and that the state and local government workforce will increase to about 21 million. These increases come at a time when the large baby boomer cohort is beginning to retire, and retirement and other separation rates for the state and local government and private sectors are ranging from 2.5 to 3 percent annually. Although the sluggish U.S. economy of 2009 (and possibly beyond) is a wildcard, this article attempts to answer several important questions:

* How has the state and local government workforce changed in the recent past?

* What occupations are, or will be, most needed by state and local governments in the next decade?

* If current trends hold, will compensation and benefit packages offered by state and local governments help or hinder their efforts to address these needs?

Public administrators across the country will need to address these questions if the public is to continue to receive quality service from trained and competent public servants.

U.S. Workforce, 1992-2008

In 1992, 10.5 million people worked for local governments across the country, including those working for cities, counties, public schools, public utilities, public hospitals, and other public entities (Table 1). In 1992-2008, this sector grew by a little over 2 percent a year, to 14.7 million in 2008. During the same period, the state government workforce grew at a rate of about 1 percent annually, employing 5.3 million employees in 2008. In 1992-2008, the private sector (nonfarm) employed 90 million in 1992 and 115 million in 2008, roughly a 1.6 percent annual increase.These private-sector employees fill a range of positions in the construction, manufacturing, transportation, utility, information, financial, business, leisure, and hospitality industries, among others.

In 1992-2007, the Southeast, Southwest, and Rocky Mountain regions of the United States saw private-sector employment increase the most (3 to 4 percent annually). At the same time, the Southwest, Rocky Mountain, and West Coast (plus Alaska, Hawaii, and Nevada) regions experienced the largest state and local government employment increases (about 2 percent annually).

Future Workforce

The sluggish economy of 2009 has seen a drop in housing prices, an increase in delinquencies and foreclosures on mortgage loans, and rising prices for energy and agricultural commodities. One effect on state and local governments is a decrease in income, sales, and property tax revenues. Even with rainy-day funds and strategic increases in taxes and fees, state and local governments have experienced or are likely to experience decreased growth in spending and investment, keeping in mind that economic uncertainty and the recently passed American Recovery and Reinvestment Act of 2009 (Recovery Act) will affect the accuracy of future labor projections. Regardless, the "overall prospects [for state and local government employment] are expected to be favorable." As of March 2008, the Bureau of Labor Statistics (BLS) at the U.S. Department of Labor projected that employment in state and local government would increase by 8 percent overall in 2006-16 (with a ten-year growth rate of 11 percent for education and 20 percent plus for health care).

While growth in the state and local sectors will be dampened by 2009's economic conditions (as has been reflected in the mainstream media), jobs will increase in areas where the public sector is key during economic downturns: community, social, health, protective, and information technology (IT) services. Table 2 shows BLS examples of public-sector occupations expected to increase by more than 10 percent in 2006-16.

In 2007 and 2008, the Center for State and Local Government Excellence conducted formal, rolling, open-ended interviews with more than 40 state and lo cal government leaders from all regions of the United States. …

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